PART I

Item 1:

Financial Statements

TERADYNE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	October 2, 2022			December 31, 2021			July 2, 2023			December 31, 2022
	(in thousands, except per share amount)
							(in thousands, except per share amount)
ASSETS
Current assets:
Cash and cash equivalents	$	710,746		$	1,122,199		$	613,208		$	854,773
Marketable securities		65,310			244,231			95,199			39,612
Accounts receivable, less allowance for credit losses of $1,865 and $2,012 at October 2, 2022 and December 31, 2021, respectively		530,349			550,749
Accounts receivable, less allowance for credit losses of $2,232 and $1,955 at July 2, 2023 and December 31, 2022, respectively								493,234			491,145
Inventories, net		310,754			243,330			347,295			325,019
Prepayments		502,678			406,266			560,682			532,962
Other current assets		7,717			9,452			14,222			14,404

Total current assets		2,127,554			2,576,227			2,123,840			2,257,915
Property, plant and equipment, net		415,181			387,240			437,077			418,683
Operating lease right-of-use assets, net		61,430			68,807			75,889			73,734
Marketable securities		111,039			133,858			104,685			110,777
Deferred tax assets		130,207			102,428			152,471			142,784
Retirement plans assets		13,805			15,110			11,514			11,761
Other assets		29,311			24,096			32,699			28,925
Acquired intangible assets, net		55,580			75,635			44,611			53,478
Goodwill		375,799			426,024			412,110			403,195

Total assets	$	3,319,906		$	3,809,425		$	3,394,896		$	3,501,252


LIABILITIES
Current liabilities:
Accounts payable	$	167,975		$	153,133		$	153,157		$	139,722
Accrued employees’ compensation and withholdings		168,102			253,667			163,653			212,266
Deferred revenue and customer advances		143,591			146,185			120,085			148,285
Other accrued liabilities		126,457			124,187			114,435			112,271
Operating lease liabilities		17,079			19,977			20,212			18,594
Income taxes payable		64,141			88,789			65,437			65,010
Current debt		14,596			19,182			32,806			50,115

Total current liabilities		701,941			805,120			669,785			746,263
Retirement plans liabilities		137,317			151,141			124,040			116,005
Long-term deferred revenue and customer advances		48,488			54,921			38,999			45,131
Long-term other accrued liabilities		15,506			15,497			16,475			15,981
Deferred tax liabilities		1,327			6,327			1,304			3,267
Long-term operating lease liabilities		51,872			56,178			65,079			64,176
Long-term incomes taxes payable		59,135			67,041			44,331			59,135
Debt		50,195			89,244

Total liabilities		1,065,781			1,245,469			960,013			1,049,958

Commitments and contingencies (Note Q)
Mezzanine equity:
Convertible common shares		—			1,512

Commitments and contingencies (Note P)
SHAREHOLDERS’ EQUITY
Common stock , $0.125 par value, 1,000,000 shares authorized; 155,782 and 162,251 shares issued and outstanding at October 2, 2022 and December 31, 2021, respectively		19,473			20,281
Common stock, $0.125 par value, 1,000,000 shares authorized; 154,148 and 155,759 shares issued and outstanding at July 2, 2023 and December 31, 2022, respectively								19,269			19,470
Additional paid-in capital		1,746,779			1,811,545			1,784,590			1,755,963
Accumulated other comprehensive loss		(84,779	)		(5,948	)		(30,472	)		(49,868	)
Retained earnings		572,652			736,566			661,496			725,729

Total shareholders’ equity		2,254,125			2,562,444			2,434,883			2,451,294

Total liabilities, convertible common shares and shareholders’ equity	$	3,319,906		$	3,809,425
Total liabilities and shareholders’ equity							$	3,394,896		$	3,501,252

The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form

10-K

for the year ended December 31, ~~2021,~~2022, are an integral part of the condensed consolidated financial statements.

Table of Contents

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


													For the Three Months Ended						For the Six Months Ended
	For the Three Months Ended						For the Nine Months Ended						July 2, 2023			July 3, 2022			July 2, 2023			July 3, 2022
	October 2, 2022			October 3, 2021			October 2, 2022			October 3, 2021
	(in thousands, except per share amount)												(in thousands, except per share amount)
Revenues:
Products	$	676,252		$	825,448		$	2,000,081		$	2,437,901		$	540,375		$	697,954		$	1,013,793		$	1,323,829
Services		150,821			125,053			423,128			379,934			144,062			142,812			288,173			272,307

Total revenues		827,073			950,501			2,423,209			2,817,835			684,437			840,766			1,301,966			1,596,136
Cost of revenues:
Cost of products		277,539			333,229			795,229			989,859			217,011			274,674			415,675			517,690
Cost of services		64,155			46,271			181,279			148,368			64,934			59,703			127,379			117,124

Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)		341,694			379,500			976,508			1,138,227			281,945			334,377			543,054			634,814

Gross profit		485,379			571,001			1,446,701			1,679,608			402,492			506,389			758,912			961,322
Operating expenses:
Selling and administrative		135,632			134,829			415,351			404,812			145,695			139,533			296,650			279,718
Engineering and development		111,715			107,220			331,781			317,644			105,706			111,951			211,468			220,067
Acquired intangible assets amortization		4,729			5,355			14,663			16,293			4,825			4,871			9,627			9,934
Restructuring and other		1,796			1,197			19,554			(3,426	)		6,358			2,044			8,395			17,758

Total operating expenses		253,872			248,601			781,349			735,323			262,584			258,399			526,140			527,477

Income from operations		231,507			322,400			665,352			944,285			139,908			247,990			232,772			433,845
Non-operating (income) expense:
Interest income		(1,318	)		(626	)		(2,972	)		(2,066	)		(6,354	)		(951	)		(11,613	)		(1,653	)
Interest expense		779			3,785			2,704			15,354			1,045			913			2,031			1,925
Other (income) expense, net		5,849			21,486			20,472			25,223			815			9,436			868			14,622

Income before income taxes		226,197			297,755			645,148			905,774			144,402			238,592			241,486			418,951
Income tax provision		42,712			41,037			101,948			115,225			24,352			40,805			37,905			59,236

Net income	$	183,485		$	256,718		$	543,200		$	790,549		$	120,050		$	197,787		$	203,581		$	359,715

Net income per common share:
Basic	$	1.17		$	1.56		$	3.41		$	4.77		$	0.78		$	1.24		$	1.31		$	2.24

Diluted	$	1.10		$	1.41		$	3.17		$	4.26		$	0.73		$	1.16		$	1.23		$	2.07

Weighted average common shares—basic		156,364			164,583			159,325			165,690			154,760			159,563			155,332			160,805

Weighted average common shares—diluted		166,733			181,987			171,156			185,492			164,751			171,159			165,530			173,367

The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s

Annual Report on Form

10-K

for the year ended December 31, ~~2021,~~2022, are an integral part of the condensed

consolidated financial statements.

Table of Contents

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


													For the Three Months Ended						For the Six Months Ended
	For the Three Months Ended						For the Nine Months Ended						July 2, 2023			July 3, 2022			July 2, 2023			July 3, 2022
	October 2, 2022			October 3, 2021			October 2, 2022			October 3, 2021
	(in thousands)												(in thousands)
Net income	$	183,485		$	256,718		$	543,200		$	790,549		$	120,050		$	197,787		$	203,581		$	359,715
Other comprehensive income, net of tax:
Foreign currency translation adjustment, net of tax of $0, $0, $0, $0, respectively		(28,951	)		(10,698	)		(66,258	)		(26,672	)		2,943			(29,230	)		12,250			(37,307	)
Available-for-sale marketable securities:
Unrealized losses arising during period, net of tax of $(997), $(44), $(3,570), $(516), respectively		(3,581	)		(176	)		(13,491	)		(1,952	)
Less: Reclassification adjustment for losses (gains) included in net income, net of tax of $(11), $(65), $48, $(186), respectively		177			(229	)		386			(670	)
Unrealized (losses) gains on marketable securities arising during period, net of tax of $(180), $(1,240), $323, and $(2,573), respectively														(568	)		(4,522	)		1,726			(9,910	)
Less: Reclassification adjustment for losses included in net income, net of tax of $8, $77, $10, $59, respectively														28			274			33			209

		(3,404	)		(405	)		(13,105	)		(2,622	)		(540	)		(4,248	)		1,759			(9,701	)
Cash flow hedges:
Unrealized gains arising during period, net of tax of $0, $0, $0, $0, respectively		537			—			537			—
Unrealized gains arising during period, net of tax of $920, $0, $1,088, $ 0 respectively														3,270			—			3,866			—
Less: Reclassification adjustment for losses included in net income, net of tax of $91, $0, $428, $0 respectively														323			—			1,524			—

														3,593			—			5,390			—
Defined benefit post-retirement plan:
Amortization of prior service credit, net of tax of $0, $0, $(2), $(2), respectively		(2	)		(2	)		(5	)		(5	)
Amortization of prior service credit, net of tax of $0, $0, $(1), $(1), respectively														(2	)		(2	)		(3	)		(3	)

Other comprehensive loss		(31,820	)		(11,105	)		(78,831	)		(29,299	)
Other comprehensive income (loss)														5,994			(33,480	)		19,396			(47,011	)

Comprehensive income	$	151,665		$	245,613		$	464,369		$	761,250		$	126,044		$	164,307		$	222,977		$	312,704

The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s

Annual Report on Form

~~Form~~ 10-K

for the year ended December 31, ~~2021,~~2022, are an integral part of the condensed

consolidated financial statements.

Table of Contents

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE COMMON SHARES

AND SHAREHOLDERS’ EQUITY

(Unaudited)


				Shareholders’ Equity																					Shareholders’ Equity
	Convertible Common Shares Value			Common Stock Shares			Common Stock Par Value			Additional Paid-in Capital			Accumulated Other Comprehensive (Loss) Income			Retained Earnings			Total Shareholders’ Equity			Convertible Common Shares Value			Common Stock Shares			Common Stock Par Value			Additional Paid-in Capital			Accumulated Other Comprehensive (Loss) Income			Retained Earnings			Total Shareholders’ Equity
				(in thousands)
																									(in thousands)
For the Three Months Ended October 2, 2022
Balance, July 3, 2022	$	—			157,880		$	19,735		$	1,721,586		$	(52,959	)	$	610,234		$	2,298,596
For the Three Months Ended July 2, 2023
Balance, April 2, 2023																						$	—			155,445		$	19,431		$	1,772,352		$	(36,466	)	$	694,145		$	2,449,462
Net issuance of common stock under stock-based plans					169			21			12,031									12,052						52			7			161									168
Stock-based compensation expense											13,194									13,194												12,077									12,077
Repurchase of common stock					(2,267	)		(283	)								(203,918	)		(204,201	)					(1,349	)		(169	)								(135,668	)		(135,837	)
Cash dividends ($ 0.11 per share)																	(17,149	)		(17,149	)
Cash dividends ($0.11 per share)																																						(17,031	)		(17,031	)
Settlements of convertible notes					207			26			(58	)								(32	)					50			6			(6	)								—
Exercise of convertible notes hedge call options					(207	)		(26	)		26									—						(50	)		(6	)		6									—
Net income																	183,485			183,485																		120,050			120,050
Other comprehensive loss														(31,820	)					(31,820	)
Other comprehensive income																																			5,994						5,994

Balance, October 2, 2022	$	—			155,782		$	19,473		$	1,746,779		$	(84,779	)	$	572,652		$	2,254,125
Balance, July 2, 2023																						$	—			154,148		$	19,269		$	1,784,590		$	(30,472	)	$	661,496		$	2,434,883

For the Three Months Ended October 3, 2021
Balance, July 4, 2021	$	21,386			165,444		$	20,680		$	1,772,302		$	15,322		$	684,952		$	2,493,256
For the Three Months Ended July 3, 2022
Balance, April 3, 2022																						$	—			161,053		$	20,132		$	1,711,690		$	(19,479	)	$	762,189		$	2,474,532
Net issuance of common stock under stock-based plans					8			1			(259	)								(258	)					33			4			(1,675	)								(1,671	)
Stock-based compensation expense											10,042									10,042												11,658									11,658
Repurchase of common stock					(1,724	)		(215	)								(212,781	)		(212,996	)					(3,206	)		(401	)								(333,933	)		(334,334	)
Cash dividends ($0.10 per share)																	(16,452	)		(16,452	)
Cash dividends ($0.11 per share)																																						(17,561	)		(17,561	)
Settlements of convertible notes					5,589			699			636,798									637,497						495			62			(149	)								(87	)
Exercise of convertible notes hedge call options					(5,589	)		(699	)		(637,015	)								(637,714	)					(495	)		(62	)		62									—
Convertible common shares		(18,505	)								18,505									18,505
Cumulative-effect of change in accounting principle related to convertible debt																																						1,752			1,752
Net income																	256,718			256,718																		197,787			197,787
Other comprehensive loss														(11,105	)					(11,105	)														(33,480	)					(33,480	)

Balance, October 3, 2021	$	2,881			163,728		$	20,466		$	1,800,373		$	4,217		$	712,437		$	2,537,493
Balance, July 3, 2022																						$	—			157,880		$	19,735		$	1,721,586		$	(52,959	)	$	610,234		$	2,298,596

For the Nine Months Ended October 2, 2022
For the Six Months Ended July 2, 2023
Balance, 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																										631			79			(3,782	)								(3,703	)
Stock-based compensation expense																																32,409									32,409
Repurchase of common stock																										(2,242	)		(280	)								(233,604	)		(233,884	)
Cash dividends ($0.22 per share)																																						(34,210	)		(34,210	)
Settlements of convertible notes																										375			47			(47	)								—
Exercise of convertible notes hedge call options																										(375	)		(47	)		47									—
Net income																																						203,581			203,581
Other comprehensive income																																			19,396						19,396

Balance, July 2, 2023																						$	—			154,148		$	19,269		$	1,784,590		$	(30,472	)	$	661,496		$	2,434,883

For the Six Months Ended July 3, 2022
Balance, December 31, 2021	$	1,512			162,251		$	20,281		$	1,811,545		$	(5,948	)	$	736,566		$	2,562,444		$	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					754			95			(4,287	)								(4,192	)					585			73			(16,318	)								(16,245	)
Stock-based compensation expense											39,056									39,056												25,862									25,862
Repurchase of common stock					(7,223	)		(903	)								(749,097	)		(750,000	)					(4,956	)		(619	)								(545,179	)		(545,798	)
Cash dividends ($0.33 per share)																	(52,617	)		(52,617	)
Cash dividends ($0.22 per share)																																						(35,470	)		(35,470	)
Settlements of convertible notes					1,211			151			(364	)								(213	)					1,004			125			(306	)								(181	)
Exercise of convertible notes hedge call options					(1,211	)		(151	)		151									—						(1,004	)		(125	)		125									—
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	)		(1,512	)								(99,322	)					94,602			(4,720	)
Net income																	543,200			543,200																		359,715			359,715
Other comprehensive loss														(78,831	)					(78,831	)														(47,011	)					(47,011	)

Balance, October 2, 2022	$	—			155,782		$	19,473		$	1,746,779		$	(84,779	)	$	572,652		$	2,254,125
Balance, July 3, 2022																						$	—			157,880		$	19,735		$	1,721,586		$	(52,959	)	$	610,234		$	2,298,596

For the Nine Months Ended October 3, 2021
Balance, December 31, 2020	$	3,787			166,123		$	20,765		$	1,765,323		$	33,516		$	387,414		$	2,207,018
Net issuance of common stock under stock-based plans					893			112			(48	)								64
Stock-based compensation expense											35,915									35,915
Repurchase of common stock					(3,288	)		(411	)								(415,769	)		(416,180	)
Cash dividends ($0.30 per share)																	(49,757	)		(49,757	)
Settlements of convertible notes					7,178			897			840,305									841,202
Exercise of convertible notes hedge call options					(7,178	)		(897	)		(842,028	)								(842,925	)
Convertible common shares		(906	)								906									906
Net income																	790,549			790,549
Other comprehensive loss														(29,299	)					(29,299	)

Balance, October 3, 2021	$	2,881			163,728		$	20,466		$	1,800,373		$	4,217		$	712,437		$	2,537,493

The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s

Annual Report on Form

10-K

for the year ended December 31, ~~2021,~~2022, are an integral part of the condensed

consolidated financial statements.

Table of Contents

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


							For the Six Months Ended
	For the Nine Months Ended						July 2, 2023			July 3, 2022
	October 2, 2022			October 3, 2021
	(in thousands)						(in thousands)
Cash flows from operating activities:
Net income	$	543,200		$	790,549		$	203,581		$	359,715
Adjustments to reconcile net income from operations to net cash provided by operating activities:
Depreciation		67,902			67,866			45,231			44,460
Stock-based compensation		37,420			34,649			32,449			25,122
Provision for excess and obsolete inventory		18,929			11,775			11,341			6,695
Amortization		15,012			27,626			9,580			10,095
Losses (gains) on investments		11,436			(4,750	)
Deferred taxes		(28,373	)		(10,732	)		(13,571	)		(23,597	)
Contingent consideration fair value adjustments		—			(7,227	)
Loss on convertible debt conversions		—			25,397
Retirement plans actuarial gains		—			(627	)
(Gains) losses on investments								(4,745	)		8,973
Other		740			243			(92	)		522
Changes in operating assets and liabilities
Accounts receivable		4,248			(103,299	)		(2,693	)		(146,384	)
Inventories		(68,817	)		21,943			(13,845	)		(46,682	)
Prepayments and other assets		(94,331	)		(138,564	)		(29,584	)		(94,751	)
Accounts payable and other liabilities		(71,682	)		65,064			(24,514	)		(43,611	)
Deferred revenue and customer advances		(5,896	)		8,699			(34,938	)		14,163
Retirement plans contributions		(3,897	)		(4,123	)		(2,482	)		(2,618	)
Income taxes		(31,370	)		(17,406	)		(13,614	)		10,815

Net cash provided by operating activities		394,521			767,083			162,104			122,917

Cash flows from investing activities:
Purchases of property, plant and equipment		(128,672	)		(103,162	)		(80,702	)		(89,743	)
Purchases of marketable securities		(267,175	)		(509,470	)		(99,018	)		(247,881	)
Proceeds from sales of marketable securities		259,200			209,437			35,577			143,642
Proceeds from maturities of marketable securities		182,092			571,277			21,997			139,652
Purchase of investment		—			(12,000	)
Proceeds from life insurance								460			—

Net cash provided by investing activities		45,445			156,082
Net cash used for investing activities								(121,686	)		(54,330	)

Cash flows from financing activities:
Issuance of common stock under stock purchase and stock option plans		28,733			32,590
Repurchase of common stock		(750,000	)		(406,180	)		(227,845	)		(532,799	)
Payments of convertible debt principal		(52,005	)		(301,997	)
Dividend payments		(52,578	)		(49,711	)		(34,184	)		(35,442	)
Payments related to net settlement of employee stock compensation awards		(32,987	)		(32,045	)		(20,308	)		(32,780	)
Payments of convertible debt principal								(17,458	)		(42,292	)
Issuance of common stock under stock purchase and stock option plans								16,599			16,536

Net cash used for financing activities		(858,837	)		(757,343	)		(283,196	)		(626,777	)

Effects of exchange rate changes on cash and cash equivalents		7,418			(489	)		1,213			8,014

(Decrease) increase in cash and cash equivalents		(411,453	)		165,333
Decrease in cash and cash equivalents								(241,565	)		(550,176	)
Cash and cash equivalents at beginning of period		1,122,199			914,121			854,773			1,122,199

Cash and cash equivalents at end of period	$	710,746		$	1,079,454		$	613,208		$	572,023

Non-cash investing activities:
Capital expenditures incurred but not yet paid:	$	2,349		$	2,286		$	1,741		$	1,855

The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s

Annual Report on Form

10-K

for the year ended December 31, ~~2021,~~2022, are an integral part of the condensed

consolidated financial statements.

Table of Contents

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A. THE COMPANY

Teradyne, Inc. (“Teradyne”) is a leading global supplier of ~~automation~~automated test equipment ~~for test~~ and ~~industrial applications.~~robotics solutions. Teradyne designs, develops, manufactures and sells automatic test systems and robotics products. Teradyne’s automatic 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 ~~industrial automation~~robotics products include collaborative robotic arms and autonomous mobile robots ~~and advanced robotic control software~~(“AMRs”) used by global manufacturing, logistics and ~~light~~ industrial customers to improve quality, increase manufacturing and material handling efficiency and decrease manufacturing and logistics costs. Teradyne’s automatic test equipment and ~~industrial automation~~robotics products and services include:

semiconductor test (“Semiconductor Test”) systems;

storage and system level test (“Storage Test”) systems, defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, and circuit-board test and inspection (“Production Board Test”) systems (collectively these products represent “System Test”);

wireless test (“Wireless Test”) systems; and

~~industrial automation~~robotics (“~~Industrial Automation”~~Robotics”) products.

B. ACCOUNTING POLICIES

Basis of Presentation

The consolidated interim financial statements include the accounts of Teradyne and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. These interim financial statements are unaudited and reflect all normal recurring adjustments that are, in the opinion of management, necessary for the fair statement of such interim financial statements. Certain prior year amounts may have been reclassified to conform to the current year presentation. The December 31, ~~2021~~2022 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by United States of America generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The accompanying financial information should be read in conjunction with the consolidated financial statements and notes thereto contained in Teradyne’s Annual Report on Form

10-K,

filed with the U.S. Securities and Exchange Commission (“SEC”) on February ~~23, 2022,~~22, 2023, for the year ended December 31, ~~2021.~~2022.

Preparation of Financial Statements and Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent liabilities. On an

on-going

basis, management evaluates its estimates, including those related to inventories, investments, goodwill, intangible and other long-lived assets, accounts receivable, income taxes, deferred tax assets and liabilities, pensions, warranties, contingent consideration liabilities, 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 judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Due to the

COVID-19

pandemic, there has been uncertainty and disruption in the global economy and our markets. 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 Quarterly Report on Form

10-Q.

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.

~~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~~

~~Under 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. Teradyne uses the

~~if-converted~~

method in the diluted earnings per share (“EPS”) calculation for convertible instruments. As a result of adoption, Teradyne recorded an increase of $1.4 million to current debt for unsettled shares, an increase of $6.6 million to long-term debt for unamortized debt discount, an increase of $1.8 million to deferred tax assets 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.~~

~~Table of Contents~~

C. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

For the ~~nine~~six months ended ~~October~~July 2, ~~2022,~~2023, there were

recently issued accounting pronouncements that had, or are expected to have, a material impact to Teradyne’s consolidated financial statements.

~~D. INVESTMENT IN OTHER COMPANY~~

On June 1, 2021, Teradyne invested $12.0 million in MachineMetrics, Inc. (“MachineMetrics”), a private company that develops and sells products to improve manufacturing performance through automated machine data collection, alerting, and analytics. Teradyne’s investment in MachineMetrics aligns with its strategyTable of providing and investing in leading edge products for automating industrial production processes in growing markets. The investment was recorded at cost and is evaluated for impairment or an indication of changes in fair value resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer on a quarterly basis. At October 2, 2022, the value of the investment was $12.0 million, and there were no changes during the three and nine months ended October 2, 2022.

Contents

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. ~~During the three months ended October 2, 2022 Teradyne combined Mobile Industrial Robots and AutoGuide into one business unit. Revenues for all periods shown below have been combined accordingly.~~

Semiconductor Test

Industrial
Automation

System
on-a-Chip

Memory

System
Test

Universal
Robots

Mobile
Industrial
Robots

Wireless

Test

Corporate

and

Eliminations

Total

(in thousands)

For the Three Months Ended October 2, 2022 (1)

Timing of Revenue Recognition

Point in Time
$ 383,801 $ 117,943 $ 93,248 $ 71,300 $ 15,025 $ 42,885 $ —   $ 724,202
Over Time
66,614 7,346 22,906 2,062 680 3,263 —   102,871

Total
$ 450,415 $ 125,289 $ 116,154 $ 73,362 $ 15,705 $ 46,148 $ —   $ 827,073

Geographical Market

Asia Pacific
$ 399,323 $ 122,839 $ 73,768 $ 18,850 $ 2,917 $ 34,420 $ —   $ 652,117
Americas
31,719 2,129 35,865 26,515 8,877 9,481 —   114,586
Europe, Middle East and Africa
19,373 321 6,521 27,997 3,911 2,247 —   60,370

Total
$ 450,415 $ 125,289 $ 116,154 $ 73,362 $ 15,705 $ 46,148 $ —   $ 827,073

For the Three Months Ended October 3, 2021 (1)

Timing of Revenue Recognition

Point in Time
$ 508,747 $ 105,454 $ 88,155 $ 76,008 $ 12,577 $ 65,409 $ (63 ) $ 856,287
Over Time
66,270 7,761 14,450 1,742 687 3,304 —   94,214

Total
$ 575,017 $ 113,215 $ 102,605 $ 77,750 $ 13,264 $ 68,713 $ (63 ) $ 950,501

Geographical Market

Asia Pacific
$ 519,886 $ 110,362 $ 62,757 $ 19,654 $ 2,788 $ 54,344 $ —   $ 769,791
Americas
29,119 2,281 34,560 23,429 5,321 11,352 (63 ) 105,999
Europe, Middle East and Africa
26,012 572 5,288 34,667 5,155 3,017 —   74,711

Total
$ 575,017 $ 113,215 $ 102,605 $ 77,750 $ 13,264 $ 68,713 $ (63 ) $ 950,501

For the Nine Months Ended October 2, 2022 (2)

Timing of Revenue Recognition

Point in Time
$ 1,102,467 $ 281,456 $ 317,230 $ 234,352 $ 49,570 $ 152,079 $ —   $ 2,137,154
Over Time
193,996 21,473 52,295 6,268 2,582 9,441 —   286,055

Total
$ 1,296,463 $ 302,929 $ 369,525 $ 240,620 $ 52,152 $ 161,520 $ —   $ 2,423,209

Geographical Market

Asia Pacific
$ 1,153,599 $ 294,986 $ 243,135 $ 54,828 $ 10,826 $ 113,472 $ —   $ 1,870,846
Americas
90,148 6,727 105,884 81,857 24,670 36,628 —   345,914
Europe, Middle East and Africa
52,716 1,216 20,506 103,935 16,656 11,420 —   206,449

Total
$ 1,296,463 $ 302,929 $ 369,525 $ 240,620 $ 52,152 $ 161,520 $ —   $ 2,423,209

~~Table of Contents~~


	Semiconductor Test						Industrial Automation											Semiconductor Test						Robotics
	System on-a-Chip		Memory		System Test		Universal Robots		Mobile Industrial Robots		Wireless Test		Corporate and Eliminations			Total
	(in thousands)																	System on-a-Chip		Memory		System Test		Universal Robots		Mobile Industrial Robots		Wireless Test		Corporate and Eliminations			Total
For the Nine Months Ended October 3, 2021 (2)

																		(in thousands)
For the Three Months Ended July 2, 2023 (1)
Timing of Revenue Recognition
Point in Time	$	1,548,895	$	291,578	$	295,666	$	214,427	$	41,612	$	154,908	$	(352	)	$	2,546,734	$	282,080	$	112,547	$	76,801	$	55,737	$	12,770	$	40,261	$	—		$	580,196
Over Time		188,022		21,776		44,595		5,001		2,111		9,596		—			271,101		72,614		7,467		17,471		2,116		1,011		3,562		—			104,241

Total	$	1,736,917	$	313,354	$	340,261	$	219,428	$	43,723	$	164,504	$	(352	)	$	2,817,835	$	354,694	$	120,014	$	94,272	$	57,853	$	13,781	$	43,823	$	—		$	684,437

Geographical Market
Asia Pacific	$	1,618,117	$	301,562	$	223,507	$	55,531	$	8,674	$	133,678	$	—		$	2,341,069	$	303,062	$	115,250	$	41,644	$	14,883	$	2,291	$	22,362	$	—		$	499,492
Americas		71,562		9,373		98,475		66,390		17,799		24,228		(352	)		287,475		32,191		4,286		40,163		22,832		6,086		19,491		—			125,049
Europe, Middle East and Africa		47,238		2,419		18,279		97,507		17,250		6,598		—			189,291		19,441		478		12,465		20,138		5,404		1,970		—			59,896

Total	$	1,736,917	$	313,354	$	340,261	$	219,428	$	43,723	$	164,504	$	(352	)	$	2,817,835	$	354,694	$	120,014	$	94,272	$	57,853	$	13,781	$	43,823	$	—		$	684,437

For the Three Months Ended July 3, 2022 (1)
Timing of Revenue Recognition
Point in Time																		$	395,211	$	74,790	$	118,692	$	80,409	$	17,801	$	60,765	$	(193	)	$	747,475
Over Time																			64,253		7,094		16,010		2,104		741		3,089		—			93,291

Total																		$	459,464	$	81,884	$	134,702	$	82,513	$	18,542	$	63,854	$	(193	)	$	840,766

Geographical Market
Asia Pacific																		$	413,537	$	78,996	$	95,584	$	17,357	$	5,317	$	44,106	$	—		$	654,897
Americas																			28,714		2,552		33,409		27,732		7,229		17,460		(193	)		116,903
Europe, Middle East and Africa																			17,213		336		5,709		37,424		5,996		2,288		—			68,966

Total																		$	459,464	$	81,884	$	134,702	$	82,513	$	18,542	$	63,854	$	(193	)	$	840,766

For the Six Months Ended July 2, 2023 (2)
Timing of Revenue Recognition
Point in Time																		$	555,354	$	173,805	$	133,658	$	125,760	$	28,735	$	75,624	$	—		$	1,092,937
Over Time																			146,173		14,384		35,245		4,124		2,229		6,874		—			209,029

Total																		$	701,528	$	188,189	$	168,903	$	129,884	$	30,964	$	82,498	$	—		$	1,301,966

Geographical Market
Asia Pacific																		$	586,321	$	178,945	$	81,234	$	28,100	$	3,793	$	45,593	$	—		$	923,986
Americas																			73,759		7,230		69,143		43,273		17,898		32,337		—			243,640
Europe, Middle East and Africa																			41,448		2,014		18,526		58,511		9,273		4,568		—			134,340

Total																		$	701,528	$	188,189	$	168,903	$	129,884	$	30,964	$	82,498	$	—		$	1,301,966

For the Six Months Ended July 3, 2022 (2)
Timing of Revenue Recognition
Point in Time																		$	718,666	$	163,513	$	223,981	$	163,591	$	34,545	$	109,194	$	(539	)	$	1,412,951
Over Time																			127,382		14,127		29,390		4,206		1,902		6,178		—			183,185

Total																		$	846,048	$	177,640	$	253,371	$	167,797	$	36,447	$	115,372	$	(539	)	$	1,596,136

Geographical Market
Asia Pacific																		$	754,277	$	172,147	$	169,369	$	35,978	$	7,909	$	79,052	$	—		$	1,218,732
Americas																			58,428		4,598		70,017		55,880		15,793		27,147		(539	)		231,324
Europe, Middle East and Africa																			33,343		895		13,985		75,939		12,745		9,173		—			146,080

Total																		$	846,048	$	177,640	$	253,371	$	167,797	$	36,447	$	115,372	$	(539	)	$	1,596,136

(1)	Includes ~~$1.8~~$1.3 million and ~~$3.8~~$1.9 million in ~~2022~~2023 and ~~2021,~~2022, respectively, for leases of Teradyne’s systems recognized outside Accounting Standards Codification (“ASC”) 606 “Revenue from Contracts with Customers.”

(2)	Includes ~~$5.9~~$2.5 million and ~~$11.1~~$4.2 million in ~~2022~~2023 and ~~2021,~~2022, respectively, for leases of Teradyne’s systems recognized outside ASC 606 “Revenue from Contracts with Customers.”

Table of Contents

Contract Balances

During the three and ~~nine~~six months ended ~~October~~July 2, ~~2022,~~2023, Teradyne recognized ~~$27.1~~$27.3 million and ~~$87.3~~$68.4 million, respectively, that was ~~previously~~ included within the deferred revenue and customer advances balances at the beginning of the period. During the three and ~~nine~~six months ended ~~October~~July 3, ~~2021,~~2022, Teradyne recognized ~~$32.9~~$25.1 million and ~~$82.5~~ $60.2

million, respectively, that was ~~previously~~ included within the deferred revenue and customer advances ~~balances.~~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 ~~October~~July 2, ~~2022,~~2023, Teradyne ~~has $1,506~~

had $

1,271.6

million of unsatisfied performance obligations. Teradyne expects to recognize ~~88%~~

approximately

% of the remaining performance obligations in the next

months and ~~12%~~

the remainder

1-3

years.

Deferred revenue and customer advances consist of the following ~~at October 2, 2022 and December 31, 2021,~~ and are included in short and long-term deferred revenue and customer advances on the balance sheet:


					July 2,		December 31,
					2023		2022
	October 2, 2022		December 31, 2021
	(in thousands)				(in thousands)
Maintenance, service and training	$	76,310	$	81,826	$	68,282	$	78,089
Customer advances, undelivered elements and other						46,380		59,147
Extended warranty		61,920		64,168		44,422		56,180
Customer advances, undelivered elements and other		53,849		55,112

Total deferred revenue and customer advances	$	192,079	$	201,106	$	159,084	$	193,416

Accounts Receivable

During the three and ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, Teradyne sold certain trade accounts receivables on a

non-recourse

basis to third-party financial institutions pursuant to factoring agreements. During the three months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, total trade accounts receivable sold under the factoring agreements were ~~$15.9~~$59.3 million and ~~$66.9~~$37.6 million, respectively. During the ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, total trade ~~accounts~~ account

receivable sold under the factoring agreements were ~~$73.0~~$93.5 million and ~~$81.7~~$57.1 million ~~respectively.~~

, respectively

. Factoring fees for the sales of receivables were recorded in interest expense and were not material. Teradyne accounted for these transactions as sales of receivables and presented cash proceeds as cash provided by operating activities in the consolidated statements of cash flows.

~~Table of Contents~~

F.E. INVENTORIES

Inventories, net consisted of the following at ~~October~~July 2, ~~2022~~2023 and December 31, ~~2021:~~2022:


	October 2, 2022		December 31, 2021		July 2, 2023		December 31, 2022
	(in thousands)
					(in thousands)
Raw material	$	228,762	$	155,641	$	250,422	$	256,065
Work-in-process		42,093		37,740		43,685		37,982
Finished goods		39,899		49,949		53,188		30,972

	$	310,754	$	243,330	$	347,295	$	325,019

Inventory reserves at ~~October~~July 2, ~~2022~~2023 and December 31, ~~2021~~2022 were ~~$124.8~~$140.3 million and ~~$114.1~~$136.8 million, respectively.

G.F. 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. Contingent consideration is classified as Level 3. The vast majority of Level 2 securities are fixed income securities priced by third party pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available, use other observable inputs like market transactions involving identical or comparable securities.

During the three and ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, there were no transfers in or out of Level 1, Level 2, or Level 3 financial instruments.

Table of Contents

Realized gains recorded in the three and ~~nine~~six months ended ~~October~~July 2, ~~2022~~ 2023

were ~~$0.1~~$

0.1

million and ~~$0.6~~$

0.4

million, respectively. Realized gains recorded in the three and

~~nine~~ six months ended ~~October~~July 3, ~~2021~~ 2022

were ~~$0.5~~$

0.1

million and ~~$2.6~~$

0.5

million, respectively. Realized losses recorded in the three and ~~nine~~six months ended ~~October~~July 2, ~~2022~~ 2023

were ~~$0.3 million and $0.9 million, respectively. No realized~~$

0.2

million. Realized losses ~~were~~ recorded in the three and ~~nine~~six months ended ~~October~~July 3, ~~2021.~~2022

were $

0.4

million and $

0.6

million, respectively. Realized gains and losses are included in other (income) expense, net.

Unrealized ~~losses~~gains on equity securities recorded in the three and ~~nine~~six months ended ~~October~~July 2, ~~2022~~ 2023

were ~~$2.3~~$2.6 million and ~~$11.1~~$4.6 million, respectively. No unrealized gains on equity securities were recorded in the three and ~~nine~~six months ended ~~October 2,~~July 3, 2022. ~~Unrealized gains~~No unrealized losses on equity securities were recorded in

the

~~nine~~ three and six months ended ~~October 3, 2021 were $3.3 million.~~July 2, 2023. Unrealized losses on equity securities recorded in the three and ~~nine~~six months ended ~~October~~July 3, ~~2021~~ 2022

were ~~$0.4~~$6.6 million and ~~$1.1~~$8.8 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 ~~October~~July 2, ~~2022~~2023 and December 31, ~~2021.~~2022.

~~Table of Contents~~

October 2, 2022


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
   $ 464,744    $ —      $ —   $ 464,744
Cash equivalents
   51,243    194,759    —   246,002
Available-for-sale
securities:

U.S. Treasury securities
   —      65,354    —   65,354
Corporate debt securities
   —      45,864    —   45,864
Commercial paper

—

17,719

—

17,719

Debt mutual funds
   6,441    —      —   6,441
U.S. government agency securities
   —      4,681    —   4,681
Certificates of deposit and time deposits
   —      1,205    —   1,205
Non-U.S.
government securities
   —      512    —   512
Equity securities:

Mutual funds
   34,573    —      —   34,573






   $ 557,001    $ 330,094    $ —   $ 887,095
Derivative assets
   —      546    —   546






Total
   $ 557,001    $ 330,640    $ —   $ 887,641






Liabilities

Derivative liabilities
   $ —      $ 1,106    $ —   $ 1,106






Total
   $ —      $ 1,106    $ —   $ 1,106






Reported as follows:


(Level 1)

(Level 2)

    (Level 3)

Total


(in thousands)

Assets

Cash and cash equivalents
   $ 515,987    $ 194,759    $ —   $ 710,746
Marketable securities
   —      65,310    —   65,310
Long-term marketable securities
   41,014    70,025    —   111,039
Prepayments and other current assets
   —      546    —   546






Total
   $ 557,001    $ 330,640    $ —   $ 887,641






Liabilities
   .
Other cur
r
ent liabilities
   $ —      $ 1,106    $ —   $ 1,106






Total
   $ —      $ 1,106    $ —   $ 1,106

Table of Contents

December 31, 2021


Quoted Prices

in Active

Markets for

Identical

Instruments

(Level 1)

Significant

Other

Observable

Inputs

(Level 2)

Significant

Unobservable

Inputs

(Level 3)

Total


(in thousands)

Assets

Cash
   $ 628,740    $ —      $ —      $ 628,740
Cash equivalents
   412,212    81,247    —      493,459
Available-for-sale
securities:
            —
Commercial paper
   —      189,620    —      189,620
U.S. Treasury securities
   —      77,789    —      77,789
Corporate debt securities
   —      56,901    —      56,901
Debt mutual funds
   7,971    —      —      7,971
U.S. government agency securities
   —      4,610    —      4,610
Certificates of deposit and time deposits
   —      1,356    —      1,356
Non-U.S.
government securities
   —      589    —      589
Equity securities:

Mutual Funds
   39,253    —      —      39,253








   $ 1,088,176    $ 412,112    $ —      $ 1,500,288
Derivative assets
   —      92    —      92








Total
   $ 1,088,176    $ 412,204    $ —      $ 1,500,380








Liabilities

Derivative liabilities
   —      118    —      118








Total
   $ —      $ 118    $ —      $ 118








Reported as follows:


(Level 1)

(Level 2)

(Level 3)

Total


(in thousands)

Assets

Cash and cash equivalents
   $ 1,040,952    $ 81,247    $ —      $ 1,122,199
Marketable securities
   —      244,231    —      244,231
Long-term marketable securities
   47,224    86,634    —      133,858
Prepayments and other current assets
   —      92    —      92








Total
   $ 1,088,176    $ 412,204    $ —      $ 1,500,380








Liabilities

Other current liabilities
   $ —      $ 118    $ —      $ 118








Total
   $ —      $ 118    $ —      $ 118

~~Changes in the fair value of Level 3 contingent consideration for the nine months ended October 2, 2022, and October 3, 2021 were as follows:~~

~~For the Three Months~~

~~Ended~~

~~For the Nine Months~~

~~Ended~~

October 2,
2022

October 3,
2021

October 2,
2022

October 3,
2021

~~(in thousands)~~

~~Balance at beginning of period~~

—

~~7,227~~

~~Fair value adjustment (a)~~

—

~~(7,227~~

)

~~Balance at end of period~~

—


	July 2, 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	$	311,803	$	—	$	—	$	311,803
Cash equivalents		290,548		10,857		—		301,405
Available-for-sale securities:
U.S. Treasury securities		—		52,238		—		52,238
Corporate debt securities		—		51,608		—		51,608
Commercial paper		—		30,882		—		30,882
Debt mutual funds		7,739		—		—		7,739
Certificates of deposit and time deposits		—		6,699		—		6,699
U.S. government agency securities		—		6,475		—		6,475
Non-U.S. government securities		—		544		—		544
Equity securities:
Mutual funds		43,699		—		—		43,699

	$	653,789	$	159,303	$	—	$	813,092
Derivative assets		—		5,819		—		5,819

Total	$	653,789	$	165,122	$	—	$	818,911

Liabilities
Derivative liabilities	$	—	$	994	$	—	$	994

Total	$	—	$	994	$	—	$	994


Reported as follows:
	(Level 1)		(Level 2)		(Level 3)		Total

	(in thousands)
Assets
Cash and cash equivalents	$	602,351	$	10,857	$	—	$	613,208
Marketable securities		—		95,199		—		95,199
Long-term marketable securities		51,438		53,247		—		104,685
Prepayments		—		5,819		—		5,819

Total	$	653,789	$	165,122	$	—	$	818,911

Liabilities		.
Other current liabilities	$	—	$	994	$	—	$	994

Total	$	—	$	994	$	—	$	994

~~(a)~~

In the nine months ended October 3, 2021, the fair value of contingent consideration for the earn-outs in connection with the acquisition of AutoGuide was reduced to zero, which resulted in a benefit of $7.2 million, primarily due to a decrease in forecasted revenues and earnings before interest and taxes.

~~On March 25, 2022, the arbitration claim filed by Industrial Automation LLC, sellers of AutoGuide, against Teradyne alleging~~

~~non-compliance~~

~~with the~~

~~earn-out~~

provisions of the Membership Interests Purchase Agreement, dated as of October 18, 2019, among Industrial Automation LLC, Teradyne and AutoGuide was settled for $26.7 million. As a result, Teradyne has no remaining

~~earn-out~~

~~obligations.~~

Table of Contents


	December 31, 2022
	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	$	632,417	$	—	$	—	$	632,417
Cash equivalents		161,767		60,589		—		222,356
Available-for-sale securities:								—
Corporate debt securities		—		50,856		—		50,856
U.S. Treasury securities		—		39,649		—		39,649
Commercial paper		—		7,159		—		7,159
Debt mutual funds		6,580		—		—		6,580
U.S. government agency securities		—		6,352		—		6,352
Certificates of deposit and time deposits		—		1,740		—		1,740
Non-U.S. government securities		—		535		—		535
Equity securities:
Mutual Funds		37,518		—		—		37,518

	$	838,282	$	166,880	$	—	$	1,005,162
Derivative assets		—		86		—		86

Total	$	838,282	$	166,966	$	—	$	1,005,248

Liabilities
Derivative liabilities		—		4,215		—		4,215

Total	$	—	$	4,215	$	—	$	4,215

Reported as follows:


	(Level 1)		(Level 2)		(Level 3)		Total

	(in thousands)
Assets
Cash and cash equivalents	$	794,184	$	60,589	$	—	$	854,773
Marketable securities		—		39,612		—		39,612
Long-term marketable securities		44,098		66,679		—		110,777
Prepayments		—		86		—		86

Total	$	838,282	$	166,966	$	—	$	1,005,248

Liabilities
Other current liabilities	$	—	$	4,215	$	—	$	4,215

Total	$	—	$	4,215	$	—	$	4,215

The carrying amounts and fair values of Teradyne’s financial instruments at ~~October~~July 2, ~~2022~~2023 and December 31, ~~2021~~ 2022

were as follows:


	October 2, 2022				December 31, 2021				July 2, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value

	(in thousands)								(in thousands)
Assets
Cash and cash equivalents	$	710,746	$	710,746	$	1,122,199	$	1,122,199	$	613,208	$	613,208	$	854,773	$	854,773
Marketable securities		176,349		176,349		378,089		378,089		199,884		199,884		150,389		150,389
Derivative assets		546		546		92		92
Derivative assets										5,819		5,819		86		86
Liabilities
Derivative liabilities		1,106		1,106		118		118
Derivative liabilities										994		994		4,215		4,215
Convertible debt		64,791		154,486		108,426		604,648		32,806		115,778		50,115		139,007

Table of Contents

The fair values of accounts receivable, net and accounts payable approximate the carrying value due to the short-term nature of these instruments.

The following table summarizes the composition of

available-for-sale

marketable securities at ~~October~~July 2, ~~2022:~~

2023:


												July 2, 2023

												Available-for-Sale
	October 2, 2022
	Available-for-Sale											Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)											(in thousands)
U.S. Treasury securities	$	69,598	$	—	$	(4,244	)	$	65,354	$	65,354	$	56,107	$	2	$	(3,871	)	$	52,238	$	42,716
Corporate debt securities		52,926		1		(7,063	)		45,864		45,622		56,680		12		(5,084	)		51,608		50,455
Commercial paper		17,691		35		(7	)		17,719		8,983		30,311		581		(10	)		30,882		19,840
Debt mutual funds		6,897		—		(456	)		6,441		3,075		8,104		—		(365	)		7,739		3,161
Certificates of deposit and time deposits													6,699		—		—			6,699		—
U.S. government agency securities		4,790		—		(109	)		4,681		4,681		6,520		—		(45	)		6,475		6,475
Certificates of deposit and time deposits		1,205		—		—			1,205		—
Non-U.S. government securities		512		—		—			512		—		544		—		—			544		—

	$	153,619	$	36	$	(11,879	)	$	141,776	$	127,715	$	164,965	$	595	$	(9,375	)	$	156,185	$	122,647

Reported as follows:

Cost

Unrealized

Gain

Unrealized

(Loss)

Fair Market

Value

Fair Market

Value of

Investments

with Unrealized

Losses


(in thousands)

Marketable securities
   $ 65,744    $ 35    $ (469 ) $ 65,310    $ 55,369
Long-term marketable securities
   87,875    1    (11,410 ) 76,466    72,346








   $ 153,619    $ 36    $ (11,879 ) $ 141,776    $ 127,715


	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses

	(in thousands)
Marketable securities	$	95,482	$	581	$	(864	)	$	95,199	$	68,121
Long-term marketable securities		69,483		14		(8,511	)		60,986		54,526

	$	164,965	$	595	$	(9,375	)	$	156,185	$	122,647

~~Table of Contents~~

The following table summarizes the composition of

available-for-sale

marketable securities at December 31, ~~2021:~~

2022:


		December 31, 2021											December 31, 2022
		Available-for-Sale
		Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses		Available-for-Sale
	��	(in thousands)											Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses

													(in thousands)
Corporate debt securities													$	57,006	$	3	$	(6,153	)	$	50,856	$	50,667
U.S. Treasury securities														44,030		—		(4,381	)		39,649		39,649
Commercial paper		$	189,614	$	15	$	(9	)	$	189,620	$	22,784		7,089		70		—			7,159		—
U.S. Treasury securities			77,707		551		(470	)		77,789		46,435
Corporate debt securities			52,266		4,863		(227	)		56,901		19,422
Debt mutual funds			7,928		43		—			7,971		—		6,997		—		(417	)		6,580		3,095
U.S. government agency securities			4,617		5		(12	)		4,610		3,296		6,442		—		(90	)		6,352		6,352
Certificates of deposit and time deposits			1,356		—		—			1,356		—		1,740		—		—			1,740		—
Non-U.S. government securities			589		—		—			589		—		535		—		—			535		—

		$	334,077	$	5,477	$	(718	)	$	338,836	$	91,937	$	123,839	$	73	$	(11,041	)	$	112,871	$	99,763

Table of Contents

Reported as follows:


												Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)											(in thousands)
Marketable securities	$	244,213	$	64	$	(46	)	$	244,231	$	54,798	$	39,950	$	70	$	(408	)	$	39,612	$	30,713
Long-term marketable securities		89,864		5,413		(672	)		94,605		37,139		83,889		3		(10,633	)		73,259		69,050

	$	334,077	$	5,477	$	(718	)	$	338,836	$	91,937	$	123,839	$	73	$	(11,041	)	$	112,871	$	99,763

As of ~~October~~July 2, ~~2022,~~2023, the fair market value of investments with unrealized losses less than one year and greater than one year totaled ~~$99.7~~$63.8 million and ~~$28.0~~$58.8 million, respectively. As of December 31, ~~2021,~~2022, the fair market value of investments with unrealized losses for less than one year and greater than one year totaled ~~$85.4~~$66.3 million and ~~$6.5~~$33.4 million, respectively.

Teradyne reviews its investments to identify and evaluate investments that have an indication of possible impairment. Based on this review, Teradyne determined that the unrealized losses related to these investments at ~~October~~July 2, ~~2022~~2023 and December 31, ~~2021~~2022 were not other than temporary.

The contractual maturities of investments in

available-for-sale

securities held at ~~October~~July 2, ~~2022~~ 2023

were as follows:


					July 2, 2023
	October 2, 2022
	Cost		Fair Market Value		Cost		Fair Market Value
	(in thousands)
					(in thousands)
Due within one year	$	65,744	$	65,310	$	95,482	$	95,199
Due after 1 year through 5 years		35,934		34,116		17,131		16,467
Due after 5 years through 10 years		4,800		4,209		6,012		5,559
Due after 10 years		40,244		31,700		38,236		31,221

Total	$	146,722	$	135,335	$	156,861	$	148,446

Contractual maturities of investments in

available-for-sale

securities held at ~~October~~July 2, ~~2022~~2023, exclude debt mutual funds with a fair market

value of ~~$6.4~~$7.7 million, as they do not have a contractual maturity date.

~~Table of Contents~~

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 b

~~cklog~~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.

Table of Contents

At ~~October~~July 2, ~~2022~~2023 and December 31, ~~2021,~~2022, Teradyne had the following ~~foreign currency forward~~ contracts to buy and sell

non-U.S.

currencies for U.S. dollars and other

non-U.S.

currencies with the following notional amounts:

October 2, 2022

December 31, 2021


Buy

Position

Sell

Position

Net

Total

Buy

Position

Sell

Position

Net

Total


(in millions)

Japanese Yen
   $ (37.5 ) $ —      $ (37.5 ) $ (31.4 ) $ —      $ (31.4 )
Taiwan Dollar
   (35.2 ) —      (35.2 ) (35.1 ) —      (35.1 )
Korean Won
   (5.4 ) —      (5.4 ) (4.2 ) —      (4.2 )
British Pound Sterling
   (1.1 ) —      (1.1 ) (1.8 ) —      (1.8 )
Danish Krone
   (0.5 ) —      (0.5 ) —   —      —
Singapore Dollar
   —   24.4    24.4 —   61.9    61.9
Euro
   —   36.7    36.7 —   44.9    44.9
Philippine Peso
   —   2.8    2.8 —   3.9    3.9
Chinese Yuan
   —   2.4    2.4 —   2.8    2.8






Total
   $ (79.7 ) $ 66.3    $ (13.4 ) $ (72.5 ) $ 113.5    $ 41.0


	Net Notional Value
	July 2, 2023		December 31, 2022

	(in millions)
Currency Hedged (Buy/Sell)


U.S. dollar/Japanese yen	$	66.3	$	37.1
U.S. dollar/Taiwan dollar		22.3		29.2
U.S. dollar/Korean won		8.1		6.4
U.S. dollar/British pound sterling		0.9		1.2
Euro/U.S. dollar		24.5		38.4
Singapore dollar/U.S. dollar		22.0		34
Philippine peso/U.S. dollar		2.5		2.7
Chinese yuan/U.S. dollar		1.8		2.2
Danish krone/U.S. dollar		0.6		—

Total	$	149.0	$	150.7

The fair value of the outstanding

~~foreign currency forward~~

contracts was a ~~loss~~

gain

of $1.1 million and ~~$0.1~~

a loss of

$0.9 million, respectively, at ~~October~~July 2, ~~2022~~2023 and December 31, ~~2021.~~2022.

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 ~~October~~July 2, ~~2022~~2023 and December 31, ~~2021,~~2022, 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:

October 2, 2022

December 31, 2021


Buy

Position

Sell

Position

Net

Total

Buy

Position

Sell

Position

Net

Total


(in millions)

Japanese Yen
   $ (5.4 ) $ 26.6    $ 21.2    $ —      $ —      $ —
Taiwan Dollar
   (9.2 ) 18.3    9.1    —      —      —










Total
   $ (14.6 ) $ 44.9    $ 30.3    $ —      $ —      $ —


	Net Notional Value
	July 2, 2023		December 31, 2022

	(in millions)
Currency Hedged (Buy/Sell)


Japanese yen/U.S. dollar	$	52.8	$	23.4
Taiwan dollar/U.S. dollar		—		5.5
U.S. dollar/Japanese yen		—		61.2
U.S. dollar/Taiwan dollar		—		10.9

Total	$	52.8	$	101.0

~~Table of Contents~~

The fair value of the outstanding cash flow hedge contracts was a gain of ~~$0.5~~$3.7 million and a loss of $3.2 million at ~~October~~July 2, ~~2022.~~2023 and December 31, 2022, respectively.

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.

The following table summarizes the fair value of derivative instruments as of ~~October~~July 2, ~~2022~~2023 and December 31, ~~2021:~~2022:


									Balance Sheet Location	July 2, 2023			December 31, 2022
	Balance Sheet Location		October 2, 2022			December 31, 2021
			(in thousands)							(in thousands)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts		Prepayments	$	9		$	92
Foreign currency forward contracts		Other current liabilities		(1,106	)		(118	)
Foreign exchange forward contracts									Prepayments	$	2,138		$	86
Foreign exchange forward contracts									Other current liabilities		(994	)		(990	)
Derivatives designated as hedging instruments:
Foreign currency option contracts		Prepayments		537			—
Foreign exchange forward contracts									Prepayments		3,681			—
Foreign exchange option contracts									Other current liabilities		—			(3,225	)

Total derivatives			$	(560	)	$	(26	)		$	4,825		$	(4,129	)

Table of Contents

The following table summarizes the effect of derivative instruments recognized in the statement of operations for the three and ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021:~~

2022:

Location of Losses (Gains)
Recognized in
Statement of Operations

For the Three Months

Ended

For the Nine Months

Ended


October 2,
2022

October 3,
2021

October 2,
2022

October 3,
2021


(in thousands)

Derivatives not designated as hedging instruments:

Foreign currency forward contracts


Other (income) expense, net
   $ 1,246    $ 2,288    $ (2,209 )    $ 5,937
Derivatives designated as hedging instruments:

Foreign currency option contracts

Revenue
   —      —      —      —








Total derivatives
      $ 1,246    $ 2,288    $ (2,209 )    $ 5,937


		For the Three Months Ended						For the Six Months Ended
	Location of (Gains) Losses Recognized in Statement of Operations	July 2, 2023			July 3, 2022			July 2, 2023			July 3, 2022

		(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Other (income) expense, net	$	(4,040	)	$	(1,703	)	$	(2,781	)	$	(3,455	)
Derivatives designated as hedging instruments:
Foreign exchange option contracts	Revenue		414			—			1,952			—

Total Derivatives		$	(3,626	)	$	(1,703	)	$	(829	)	$	(3,455	)

The ~~above~~ table does not reflect the corresponding gains and losses from the remeasurement of the monetary assets and liabilities

denominated in foreign currencies. For the three and ~~nine~~six months ended ~~October~~July 2, ~~2022,~~2023, net losses from ~~the~~ remeasurement of monetary assets and liabilities denominated in foreign currencies were ~~$1.6~~$6.7 million and ~~$9.5~~$7.0 million, respectively. For the three and ~~nine~~six months ended ~~October~~July 3, ~~2021,~~2022, net ~~gains~~losses from ~~the~~ remeasurement of monetary assets and liabilities denominated in foreign currencies were ~~$1.0~~$3.7 million and ~~$1.3~~$8.0 million, respectively.

See Note H:G: “Debt” regarding derivatives related to the convertible senior notes.

H.G. DEBT

Convertible Senior Notes

On December 12, 2016, Teradyne completed a private offering of $460.0 million aggregate principal amount of ~~1.25~~

%1.25% convertible senior unsecured notes (the “Notes”) due December 15, 2023 and received net proceeds, after issuance costs, of approximately

~~$450.8~~

$450.8 million,

~~$33.0~~ $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 will mature on

December 15, 2023, unless earlier repurchased or converted. The Notes bear interest at a rate of 1.25% per year payable semiannually in arrears on June 15 and December 15 of each year. The Notes will be convertible at the option of the noteholders at any time prior to the close of

business on the business day immediately preceding September 15, 2023, only under the following circumstances: (1) during any calendar quarter beginning after

March 31, 2017 (and only during such calendar quarter), if the closing sale price of Teradyne’s common stock, for at least 20 trading days (whether or

not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater

than 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive

trading day period

~~(the~~ (the “measurement period”) in which the trading price (as defined in the Indenture) per $1,000 principal amount of Notes for each

trading day of the measurement period was less than 98% of the product of the closing sale price of the Teradyne’s common stock and the

conversion rate on each such trading day; and (3) upon the occurrence

~~Table~~ of ~~Contents~~

of specified

corporate events. On or after September 15, 2023, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances. Teradyne may satisfy its future conversion obligation by paying cash for the principal amount of the Notes and paying or delivering cash, shares of its common stock or a combination of cash and shares of its common stock, at Teradyne’s election for the amount in excess of principal. On November 4, 2021, Teradyne made an irrevocable election under the Indenture to require the principal portion of the remaining Notes to be settled in cash. As of ~~October~~July 2, ~~2022,~~2023, the conversion price was approximately ~~$31.47~~$31.43 per share of Teradyne’s common stock. The conversion rate is subject to adjustment under certain circumstances. As of ~~November~~August 4, ~~2022,~~2023, one hundred and ~~sixteen~~thirty-four debt holders had exercised the option to convert ~~$401.8~~$436.1 million worth of notes.

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, with a strike price equal to the conversion price of the Notes of ~~$31.47.~~$31.43.

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. The Warrant Transactions currently cover, subject to customary anti-dilution adjustments, approximately 14.6 million shares of common stock. As of ~~October~~July 2, ~~2022,~~

2023, the strike price of the warrants was approximately ~~$39.50~~$39.44 per share. The strike price is subject to adjustment under certain circumstances. The Warrant Transactions could have a dilutive effect to Teradyne’s common stock to the extent that the market price per share of Teradyne’s common stock, as measured under the terms of the Warrant Transactions, exceeds the applicable strike price of the warrants.

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The Note Hedge Transactions are expected to reduce the potential dilution to Teradyne’s common stock upon any conversion of the Notes. However, the Warrant Transactions could separately have a dilutive effect to the extent that the market value per share of Teradyne’s common stock exceeds the applicable strike price of the warrant. The net cost of the Note Hedge Transactions, after being partially offset by the proceeds from the sale of the warrants, was approximately ~~$33.0~~

$33.0 million.

In connection with establishing their initial hedge of these convertible note hedge and warrant transactions, the Option Counterparties have entered into various derivative transactions with respect to Teradyne’s common stock and/or purchased shares of Teradyne’s common stock or other securities, including the Notes, concurrent with, or shortly after, the pricing of the Notes. In addition, the Option Counterparties may modify their hedge positions by entering into or unwinding various derivative transactions with respect to Teradyne’s common stock or by selling Teradyne’s common stock or other securities, including the Notes, in secondary market transactions (and may do so during any observation period related to the conversion of the Notes). These activities could adversely affect the value of Teradyne’s common stock and the Notes.

Originally, Teradyne allocated $100.8 million of the $460.0 million principal amount of the Notes to the equity component, which represented a discount to the debt and was amortized to interest expense using the effective interest method through December 2023. Effective January 1, 2022, Teradyne adopted ASC

2020-06

using the modified retrospective method of transition and accounts for the debt as a single liability measured at its amortized cost. As a result of the 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.

~~On November 4, 2021, Teradyne made an irrevocable election under the Indenture to require the principal portion of the remaining Notes to be settled in cash.~~

Debt issuance fees ~~of approximately $0.2 million,~~ at ~~October~~July 2, ~~2022, are being~~2023, have been fully amortized to interest expense using the effective interest method over the seven-year term of the Notes.

The tables below ~~tables~~ represent the key components of Teradyne’s convertible senior notes:


	July 2, 2023		December 31, 2022

	(in thousands)
Debt principal	$	32,806	$	50,228
Unamortized debt issuance fees		—		113

Net c arrying amount of convertible debt	$	32,806	$	50,115

October 2,
2022

December 31,
2021


(in thousands)

Debt principal
   $ 64,980    $ 116,980
Unamortized debt issuance fees (1)
   189    8,554




Net Carrying amount of convertible debt
   $ 64,791    $ 108,426

Teradyne’s convertible senior notes were reported as current debt at July 2, 2023 and December 31, 2022.

~~Table of Contents~~

~~Reported~~The interest expense on Teradyne’s convertible senior notes for the three and six months ended July 2, 2023 and July 3, 2022 was as follows:

October 2,
2022

December 31,
2021


(in thousands)

Current debt
   $ 14,596    $ 19,182
Long-term debt
   50,195    89,244




Net carrying amount of convertible debt
   $ 64,791    $ 108,426

For the Three Months
Ended

For the Nine Months
Ended


October 2,
2022

October 3,
2021

October 2,
2022

October 3,
2021


(in thousands)

(in thousands)

Contractual interest expense on the coupon
   $ 159    $ 355    $ 592    $ 2,666
Amortization of debt issuance fees recognized as interest expense (2)
   43    2,424    173    9,771








Total interest expense on the convertible debt
   $ 202    $ 2,779    $ 765    $ 12,437

~~(1)~~

~~Unamortized debt issuance fees as of December 31, 2021 include unamortized debt discount of $8.1 million, which was eliminated with the adoption of ASU~~

~~2020-~~

~~on January 1, 2022.~~


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

	(in thousands)				(in thousands)
Contractual interest expense on the coupon	$	100	$	121	$	238	$	432
Amortization of debt issuance fees recognized as interest expense		—		64		113		130

Total interest expense on the convertible debt	$	100	$	185	$	351	$	562

~~(2)~~

~~Three and nine months ended October 3, 2021 includes the amortization of debt discount component, which was eliminated with the adoption of ASU~~

~~2020-06~~

~~on January 1, 2022.~~

As of ~~October~~July 2, ~~2022,~~2023, the conversion price was approximately ~~$31.47~~$31.43 per share and the

~~if-converted~~

if converted value of the notes was ~~$155.2~~$116.2 million.

During the nine months ended October 2, 2022, thirty-three debt holders elected to convert $52.0 million of debt principal. The conversion of the debt was settled in cash for principal amount and in shares for the excess of conversion value over principal amount. The 1.2 million shares issued to the debt holders were received from exercising the convertible notes hedge call options.

Additional conversions of approximately ~~$14.6~~$8.9 million of debt principal will occur in the ~~fourth~~third quarter of ~~2022 and the liability is included in current debt.~~

2023. Teradyne expects to make ~~contractual~~principal interest ~~payme~~

~~nts~~payments of ~~$0.6~~$0.2 million in the next

12 ~~months and $0.3 million thereafter.~~

months.

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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 provided 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.

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~~

$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~~quarter: a consolidated leverage ratio and an interest coverage ratio.

~~Table of Contents~~

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.

As of ~~November~~August 4, ~~2022,~~2023, the Credit Agreement was undrawn and Teradyne ~~has not borrowed any funds under the credit facility and~~ was in compliance with all ~~covenants.~~covenants under the Credit Agreement.

~~See Note U: “Subsequent Event” regarding an increase in the amount of the Credit Facility.~~

I.H. PREPAYMENTS

Prepayments consist of the following:


	July 2, 2023		December 31, 2022

	(in thousands)
Contract manufacturer and supplier prepayments	$	515,350	$	491,105
Prepaid maintenance and other services		15,557		14,545
Prepaid taxes		15,437		18,625
Other prepayments		14,338		8,687

Total prepayments	$	560,682	$	532,962

October 2,
2022

December 31,
2021


(in thousands)

Contract manufacturer and supplier prepayments
   $ 466,648    $ 364,478
Prepaid maintenance and other services
   13,760    13,660
Prepaid taxes
   12,531    15,090
Other prepayments
   9,739    13,038




Total prepayments
   $ 502,678    $ 406,266

J.I. 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.


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

	(in thousands)
Balance at beginning of period	$	12,901		$	20,105		$	14,181		$	24,577
Accruals for warranties issued during the period		3,261			6,429			7,378			10,530
Accruals related to pre-existing warranties		(352	)		(1,611	)		(757	)		(4,370	)
Settlements made during the period		(3,267	)		(8,887	)		(8,259	)		(14,701	)

Balance at end of period	$	12,543		$	16,036		$	12,543		$	16,036

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For the Three Months

Ended

For the Nine Months

Ended


October 2,
2022

October 3,
2021

October 2,
2022

October 3,
2021


(in thousands)

Balance at beginning of period
   $ 16,036    $ 25,676    $ 24,577    $ 16,633
Accruals for warranties issued during the period
   4,930    6,641    15,460    28,719
Accruals related to
pre-existing
warranties
   (654 )    (963 )    (5,024 )    (3,966 )
Settlements made during the period
   (6,181 )    (5,233 )    (20,882 )    (15,265 )








Balance at end of period
   $ 14,131    $ 26,121    $ 14,131    $ 26,121

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.


													For the Three Months Ended						For the Six Months Ended
													July 2,			July 3,			July 2,			July 3,
	For the Three Months Ended						For the Nine Months Ended						2023			2022			2023			2022
	October 2, 2022			October 3, 2021			October 2, 2022			October 3, 2021
	(in thousands)												(in thousands)
Balance at beginning of period	$	65,791		$	63,525		$	64,168		$	51,929		$	49,343		$	65,726		$	56,180		$	64,168
Deferral of new extended warranty revenue		6,987			12,728			28,550			36,533			4,467			9,788			8,881			21,563
Recognition of extended warranty deferred revenue		(10,858	)		(8,771	)		(30,798	)		(20,980	)		(9,388	)		(9,723	)		(20,639	)		(19,940	)

Balance at end of period	$	61,920		$	67,482		$	61,920		$	67,482		$	44,422		$	65,791		$	44,422		$	65,791

J. STOCK-BASED COMPENSATION

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 the six months ended

~~Table~~July 2, 2023, Teradyne recorded a stock-based compensation expense of ~~Contents~~$

5.9

~~K. STOCK-BASED COMPENSATION~~

million related to the Retirement Agreement.

Under Teradyne’s stock compensation plans, Teradyne grants ~~service-based~~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 ~~service-based~~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.

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If a PRSU recipient’s employment ends prior to the determination of the performance percentage due to (1) permanent disability or death or (2) retirement or termination other than for cause, after attaining both at least age sixty and at least ten years of service, 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.~~years

During the ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, Teradyne granted ~~0.4~~0.5 million and ~~0.3~~0.4 million of service-based restricted stock unit awards to employees at a weighted average grant date fair value of ~~$110.34~~$102.30 and ~~$113.76,~~$111.21, respectively, and $0.1 million of service-based restricted stock unit awards to

non-employee

directors at a weighted average grant date fair value of ~~$106.91~~$90.50 and ~~$127.77,~~$106.91, respectively.

During the ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, Teradyne granted 0.1 million of PBIT PRSUs with a grant date fair value of $102.23 and $110.84, ~~and $113.65,~~

respectively.

~~Table of Contents~~

~~Duri~~

ngDuring the ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, Teradyne granted 0.1 million of TSR PRSUs, with a grant date fair value of ~~$101.06~~$137.64 and ~~$125.02,~~$101.06, respectively. The fair value was estimated using the Monte Carlo simulation model with the following assumptions:

For the Nine Months

Ended


October 2,
2022

October 3,
2021

Risk-free interest rate
   1.4 % 0.2 %
Teradyne volatility-historical
   47.1 % 43.9 %
NYSE Composite Index volatility-historical
   22.7 % 22.9 %
Dividend yield
   0.4 % 0.4 %


	For the Six Months Ended
	July 2,			July 3,
	2023			2022

Risk-free interest rate		3.9	%		1.4	%
Teradyne volatility-historical		50.2	%		47.1	%
NYSE Composite Index volatility-historical		24.8	%		22.7	%
Dividend yield		0.4	%		0.4	%

Expected volatility was based on the historical volatility of Teradyne’s stock and the NYSE Composite Index 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 grant. Dividend yield was based upon an estimated annual dividend amount of $0.44 per share divided by Teradyne’s stock price on the grant date of ~~$112.12~~$103.44 for the ~~2022~~2023 grant and an estimated annual dividend amount of ~~$0.40~~$0.44 per share divided by Teradyne’s stock price on the grant date of ~~$113.48~~$112.12 for the ~~2021~~2022 grant.

During the ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, Teradyne granted 0.1 million of service-based stock options to executive officers at a weighted average grant date fair value of ~~$39.01~~$40.90 and ~~$36.60,~~$39.01, respectively.

The fair value of stock options was estimated using the Black-Scholes option-pricing model with the following assumptions:


							For the Six Months Ended
							July 2,			July 3,
	For the Nine Months Ended						2023			2022
	October 2, 2022			October 3, 2021
Expected life (years)		4.0			5.0			4.0			4.0
Risk-free interest rate		1.6	%		0.4	%		3.7	%		1.6	%
Volatility-historical		43.7	%		37.8	%		46.7	%		43.7	%
Dividend yield		0.4	%		0.4	%		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 $0.44 per share divided by Teradyne’s stock price on the grant date of ~~$112.12~~$103.44 for the ~~2022~~2023 grant and an estimated annual dividend amount of ~~$0.40~~$0.44 per share divided by Teradyne’s stock price on the grant date of ~~$113.48~~$112.12 for the ~~2021~~2022 grant.

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K. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in ~~accumulated~~

ccumulated other comprehensive income (loss), which are presented net of tax, consist of the following:

Foreign
Currency
Translation
Adjustment

Unrealized
Gains
(Losses) on
Marketable
Securities

Unrealized
Gains on
Cash Flow
Hedges

Retirement
Plans
Prior
Service
Credit

Total


(in thousands)

Nine Months Ended October 2, 2022

Balance at December 31, 2021, net of tax of $0, $1,055, $0, $(1,128), respectively
   $ (10,818 ) $ 3,704 $ —      $ 1,166 $ (5,948 )
Other comprehensive (loss) gain before reclassifications, net of tax of $0, $(3,570), $0, $0, respectively
   (66,258 ) (13,491 ) 537    —   (79,212 )
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $48, $0, $(2), respectively
   —   386 —      (5 ) 381




Net current period other comprehensive (loss) gain, net of tax of $0, $(3,522), $0, $(2), respectively
   (66,258 ) (13,105 ) 537    (5 ) (78,831 )




Balance at October 2, 2022, net of tax of $0, $(2,467), $0, $(1,130), respectively
   $ (77,076 ) $ (9,401 ) $ 537    $ 1,161 $ (84,779 )




Nine Months Ended October 3, 2021

Balance at December 31, 2020, net of tax of $0, $1,910, $0, $(1,126), respectively
   $ 25,389 $ 6,954 $ —      $ 1,173 $ 33,516
Other comprehensive loss before reclassifications, net of tax of $0, $(516), $0, $0, respectively
   (26,672 ) (1,952 ) —      —   (28,624 )
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $(186), $0, $(2), respectively
   —   (670 ) —      (5 ) (675 )




Net current period other comprehensive loss, net of tax of $0, $(702), $0, $(2), respectively
   (26,672 ) (2,622 ) —      (5 ) (29,299 )




Balance at October 3, 2021, net of tax of $0, $1,208, $0, $(1,128), respectively
   $ (1,283 ) $ 4,332 $ —      $ 1,168 $ 4,217


	Foreign Currency Translation Adjustment			Unrealized (Losses) Gains on Marketable Securities			Unrealized (Losses) Gains on Cash Flow Hedges			Retirement Plans Prior Service Credit			Total

	(in thousands)
Six Months Ended July 2, 2023
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, $323, $1,088, $0, respectively		12,250			1,726			3,866			—			17,842
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $10, $428, $(1), respectively		—			33			1,524			(3	)		1,554

Net current period other comprehensive gain (loss), net of tax of $0, $333, $1,516, $(1), respectively		12,250			1,759			5,390			(3	)		19,396

Balance at July 2, 2023, net of tax of $0, $(1,975), $808, $(1,131), respectively	$	(27,599	)	$	(6,902	)	$	2,873		$	1,156		$	(30,472	)

Six Months Ended July 3, 2022
Balance at December 31, 2021, net of tax of $0, $1,055, $0, $(1,128), respectively	$	(10,818	)	$	3,704		$	—		$	1,166		$	(5,948	)
Other comprehensive loss before reclassifications, net of tax of $0, $(2,573), $0, $0, respectively		(37,307	)		(9,910	)		—			—			(47,217	)
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $59, $0, $(1), respectively		—			209			—			(3	)		206

Net current period other comprehensive loss, net of tax of $0, $(2,514), $0, $(1), respectively		(37,307	)		(9,701	)		—			(3	)		(47,011	)

Balance at July 3, 2022, net of tax of $0, $(1,459), $0, $(1,129), respectively	$	(48,125	)	$	(5,997	)	$	—		$	1,163		$	(52,959	)

Reclas

~~Reclassifications~~sifica

tions out of accumulated other comprehensive income (loss) to the statement of operations for the three and ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021~~2022, were as follows:

Details about Accumulated Other Comprehensive Income (Loss) Components

For the Three Months

Ended

For the Nine Months

Ended

Affected Line Item

in the Statements

of Operations


October 2,
2022

October 3,
2021

October 2,
2022

October 3,
2021


(in thousands)

Available-for-sale
marketable securities:

Unrealized (losses) gains, net of tax of $11, $65, $(48
)
, $186, respectively
   $ (177 ) $ 229    $ (386 ) $ 670    Other (income)
expense, net
Defined benefit postretirement plan:

Amortization of prior service credit, net of tax of $0, $0, $2, $2, respectively
   2 2    5 5
(a)






Total reclassifications, net of tax of $11, $65, $46, $188, respectively
   $ (175 ) $ 231    $ (381 ) $ 675    Net income


Details about Accumulated Other Comprehensive Income (Loss) Components	For the Three Months Ended						For the Six Months Ended						Affected Line Item in the Statements of Operations
	July 2,			July 3,			July 2,			July 3,
	2023			2022			2023			2022

	(in thousands)
Available-for-sale marketable securities:
Unrealized losses, net of tax of $(8), $(77), $(10), $(59), respectively	$	(28	)	$	(274	)	$	(33	)	$	(209	)	Other (income) expense, net
Cash flow hedges:
Unrealized losses, net of tax of $(91), $0, $(428), $0, respectively		(323	)		—			(1,524	)		—		Revenue
Defined benefit pension and postretirement plans:
Amortization of prior service credit, net of tax of $0, $0, $1, $1, respectively		2			2			3			3		(a)

Total reclassifications, net of tax of $(99), $(77), $(437), $(58), respectively	$	(349	)	$	(272	)	$	(1,554	)	$	(206	)	Net income

(a)	The amortization of prior service credit is included in the computation of net periodic postretirement benefit cost. See Note P:O: “Retirement Plans.”

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L. GOODWILL AND ACQUIRED 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. In the ~~nine~~six months ended ~~October~~July 2, ~~2022,~~2023, there were no interim indicators of impairment. Goodwill is considered impaired when the net book value of a reporting unit exceeds its estimated fair value.

The changes in the carrying amount of goodwill by reportable segments for the ~~nine~~six months ended ~~October~~July 2, ~~2022,~~2023, were as follows:


	Industrial Automation			Wireless Test			Semiconductor Test			System Test			Total			Robotics		Wireless Test			Semiconductor Test			System Test			Total
	(in thousands)
Balance at December 31, 2021
																(in thousands)
Balance at December 31, 2022
Goodwill	$	405,971		$	361,819		$	262,101		$	158,699		$	1,188,590		$	383,166	$	361,819		$	262,077		$	158,699		$	1,165,761
Accumulated impairment losses		—			(353,843	)		(260,540	)		(148,183	)		(762,566	)		—		(353,843	)		(260,540	)		(148,183	)		(762,566	)

Total Goodwill		405,971			7,976			1,561			10,516			426,024			383,166		7,976			1,537			10,516			403,195

Foreign currency translation adjustment		(50,126	)		—			(99	)		—			(50,225	)		8,857		—			58			—			8,915

Balance at October 2, 2022
Balance at July 2, 2023
Goodwill		355,845			361,819			262,002			158,699			1,138,365			392,023		361,819			262,135			158,699			1,174,676
Accumulated impairment losses		—			(353,843	)		(260,540	)		(148,183	)		(762,566	)		—		(353,843	)		(260,540	)		(148,183	)		(762,566	)

Total Goodwill	$	355,845		$	7,976		$	1,462		$	10,516		$	375,799		$	392,023	$	7,976		$	1,595		$	10,516		$	412,110

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.

Amortizable intangible assets consist of the following and are included in intangible assets, net on the balance sheet:


	Gross Carrying Amount (1)		Accumulated Amortization (1)			Foreign Currency Translation Adjustment			Net Carrying Amount

	(in thousands)
Balance at July 2, 2023
Developed technology	$	267,708	$	(237,078	)	$	(5,444	)	$	25,186
Customer relationships		52,109		(46,699	)		200			5,610
Tradenames and trademarks		59,007		(43,904	)		(1,288	)		13,815

Total intangible assets	$	378,824	$	(327,681	)	$	(6,532	)	$	44,611

Balance, December 31, 2022
Developed technology	$	270,967	$	(234,208	)	$	(5,935	)	$	30,824
Customer relationships		57,739		(51,186	)		172			6,725
Tradenames and trademarks		59,387		(41,930	)		(1,528	)		15,929

Total intangible assets	$	388,093	$	(327,324	)	$	(7,291	)	$	53,478

Gross
Carrying
Amount

Accumulated
Amortization

Foreign
Currency
Translation
Adjustment

Net
Carrying
Amount


(in thousands)

Balance at October 2, 2022

Developed technology
   $ 272,547    $ (232,802 )    $ (7,620 )    $ 32,125
Customer relationships
   57,739    (50,623 )    126    7,242
Tradenames and trademarks
   59,387    (40,809 )    (2,365 )    16,213








Total intangible assets
   $ 389,673    $ (324,234 )    $ (9,859 )    $ 55,580








Balance, December 31, 2021

Developed technology
   $ 272,547    $ (223,413 )    $ (4,093 )    $ 45,041
Customer relationships
   57,739    (48,921 )    209    9,027
Tradenames and trademarks
   59,387    (37,237 )    (583 )    21,567








Total intangible assets
   $ 389,673    $ (309,571 )    $ (4,467 )    $ 75,635

(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 asset amortization expense was ~~$4.7~~$4.8 million and ~~$14.7~~$9.6 million, respectively, for the three and ~~nine~~six months ended ~~October~~July 2, ~~2022~~ 2023

and ~~$5.4~~$4.9 million and ~~$16.3~~$9.9 million, respectively

for the three and ~~nine~~six months ended ~~October~~July 3, ~~2021.~~2022.

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Estimated intangible asset amortization expense for each of the five succeeding fiscal years and thereafter is as follows:


Year	Amortization Expense		Amortization Expense
	(in thousands)		(in thousands)
2022	$	4,592
2023		17,922	$	9,443
2024		17,617		18,834
2025		10,855		11,352
2026		2,262		2,379
2027				1,162
Thereafter		2,332		1,441

N.M. NET INCOME PER COMMON SHARE

The following table sets forth the computation of basic and diluted net income per common share:

For the Three Months

Ended

For the Nine Months

Ended


October 2,
2022

October 3,
2021

October 2,
2022

October 3,
2021


(in thousands, except per share amounts)

Net income for basic and diluted net income per share
   $ 183,485    $ 256,718    $ 543,200    $ 790,549








Weighted average common shares-basic
   156,364    164,583    159,325    165,690
Effect of dilutive potential common shares:

Convertible note hedge warrant shares (1)
   8,284    9,819    9,114    9,774
Incremental shares from assumed conversion of convertible notes (2)
   1,453    6,464    1,965    8,784
Restricted stock units
   564    1,035    673    1,147
Stock options
   45    73    56    87
Employee stock purchase plan
   23    13    23    10








Dilutive potential common shares
   10,369    17,404    11,831    19,802








Weighted average common shares-diluted
   166,733    181,987    171,156    185,492








Net income per common share-basic
   $ 1.17    $ 1.56    $ 3.41    $ 4.77








Net income per common share-diluted
   $ 1.10    $ 1.41    $ 3.17    $ 4.26


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

	(in thousands, except per share amounts)
Net income for basic and diluted net income per share	$	120,050	$	197,787	$	203,581	$	359,715

Weighted average common shares-basic		154,760		159,563		155,332		160,805
Effect of dilutive potential common shares:
Convertible note hedge warrant shares (1)		8,876		9,029		8,929		9,528
Incremental shares from assumed conversion of convertible notes (2)		742		1,900		828		2,220
Restricted stock units		323		581		389		730
Stock options		43		54		45		61
Employee stock purchase plan		7		32		7		23

Dilutive potential common shares		9,991		11,596		10,198		12,562

Weighted average common shares-diluted		164,751		171,159		165,530		173,367

Net income per common share-basic	$	0.78	$	1.24	$	1.31	$	2.24

Net income per common share-diluted	$	0.73	$	1.16	$	1.23	$	2.07

(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 assumed conversion of the convertible notes were 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 the three and ~~nine~~six months ended ~~October~~July 2, ~~2022~~ 2023

excludes the effect of the potential vesting of ~~0.7~~0.4 million and ~~0.9~~0.5 million, respectively, of restricted stock units because the effect would have been anti-dilutive.

The computation of diluted net income per common share for the three and ~~nine~~six months ended ~~October~~July 3, ~~2021~~ 2022

excludes the effect of the potential vesting of 0.1 million and ~~0.1~~0.2 million, respectively, of restricted stock units because the effect would have been anti-dilutive.

O.N. RESTRUCTURING AND OTHER

During the three months ended ~~October~~July 2, ~~2022,~~2023, Teradyne recorded ~~$1.2~~$5.1 million of severance charges related to headcount reductions of 112 people primarily in ~~Industrial Automation~~Semiconductor Test and ~~$0.7~~Robotics

which included charges related to a voluntary early retirement program for employees meeting certain conditions

and a charge of $1.1 million for an increase in ~~legal liabilities.~~environmental liability.

During the three months ended ~~October~~July 3, ~~2021,~~2022, Teradyne recorded ~~$0.6~~a charge of $1.5 million ~~of severance charges primarily~~for an increase in ~~Industrial Automation.~~environmental and legal liabilities.

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During the ~~nine~~six months ended ~~October~~July 2, 2023, Teradyne recorded $

7.2

million of severance charges related to headcount reductions of 1

people primarily in Semiconductor Test and Robotics

which included charges related to a voluntary early retirement program for employees meeting certain conditions

and a charge of $

1.1

million for an increase in environmental liability.

During the six months ended July 3, 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, and a charge of ~~$2.7~~$2.0 million for an increase in environmental and legal liabilities, and $2.1 million of severance charges primarily in Industrial Automation. Previously, in the three months ended December 31, 2021, Teradyne recorded a charge of $12.0 million related to this

~~earn-out~~

~~dispute.~~

During the nine months ended October 3, 2021, Teradyne recorded a gain of $7.2 million for the decrease in the fair value of the AutoGuide contingent consideration liability, partially offset by a charge of $1.7 million for an increase in environmental and legal liabilities, and $1.2 million of severance charges primarily in Industrial Automation.

liabilities.

P.O. RETIREMENT PLANS

ASC 715, “Compensation—Retirement Benefits,” requires an employer with defined benefit plans or other postretirement benefit plans to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plans as defined by ASC 715. The pension asset or liability represents a difference between the fair value of the pension plan’s assets and the projected benefit obligation at December 31. Teradyne uses a December 31 measurement date for all its plans.

Defined Benefit Pension Plans

Teradyne has defined benefit pension plans covering a portion of domestic employees and employees of certain

non-U.S.

subsidiaries. Benefits under these plans are based on employees’ years of service and compensation. Teradyne’s funding policy is to make contributions to these plans in accordance with local laws and to the extent that such contributions are tax deductible. The assets of the U.S. ~~qualified~~qu

alifie

d pension plan consist primarily of fixed income and equity securities. In addition, Teradyne has an unfunded supplemental executive ~~defined benefit~~def

ined b

enefit plan in the United States to provide retirement benefits in excess of levels allowed by the Employment Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (the “IRC”), as well as unfunded qualified foreign plans.

In the ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, Teradyne contributed ~~$2.5~~$1.5 million and ~~$2.5~~$1.6 million, respectively, to the U.S. supplemental executive defined benefit pension plan, and ~~$0.7~~$0.6 million and ~~$0.8~~$0.5 million, respectively, to certain qualified pension plans for

non-U.S.

subsidiaries.

For the three and ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, Teradyne’s net periodic pension cost was comprised of the following:


													For the Three Months Ended

	For the Three Months Ended												July 2, 2023						July 3, 2022
	October 2, 2022						October 3, 2021						United States			Foreign			United States			Foreign
	United States			Foreign			United States			Foreign
	(in thousands)												(in thousands)
Service cost	$	397		$	153		$	452		$	240		$	272		$	110		$	397		$	180
Interest cost		1,222			96			1,098			86			1,714			263			1,221			120
Expected return on plan assets		(732	)		(16	)		(936	)		(17	)		(1,286	)		(9	)		(732	)		(18	)
Net actuarial loss (gain)														24			—			(45	)		—

Total net periodic pension cost	$	887		$	233		$	614		$	309		$	724		$	364		$	841		$	282


	For the Six Months Ended

	July 2, 2023						July 3, 2022
	United States			Foreign			United States			Foreign

	(in thousands)
Service cost	$	543		$	220		$	794		$	386
Interest cost		3,425			526			2,443			238
Expected return on plan assets		(2,571	)		(18	)		(1,463	)		(38	)
Net actuarial loss (gain)		24			—			(45	)		—

Total net periodic pension cost	$	1,421		$	728		$	1,729		$	586

For the Nine Months Ended


October 2, 2022

October 3, 2021


United
States

Foreign

United
States

Foreign


(in thousands)

Service cost
   $ 1,191    $ 539    $ 1,357    $ 720
Interest cost
   3,665    333    3,295    257
Expected return on plan assets
   (2,195 )    (54 )    (2,809 )    (50 )
Net actuarial gain
   (45 )    —      (400 )    —








Total net periodic pension cost
   $ 2,616    $ 818    $ 1,443    $ 927

Postretirement Benefit Plan

In addition to receiving pension benefits, Teradyne employees in the United States who meet early retirement eligibility requirements as of their termination dates may participate in Teradyne’s Welfare Plan, which includes medical and dental benefits up to age 65. Death benefits provide a fixed sum to retirees’ survivors and are available to all retirees. Substantially all of Teradyne’s current U.S. employees could become eligible for these benefits and the existing benefit obligation relates primarily to those employees.

During the three and six months ended July 2, 2023, Teradyne recorded special termination benefit charges associated with a voluntary early retirement program.

Table of Contents

For the three and ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, Teradyne’s net periodic postretirement benefit cost ~~(credit)~~ was comprised of the following:

For the Three Months

Ended

For the Nine Months

Ended


October 2,
2022

October 3,
2021

October 2,
2022

October 3,
2021


(in thousands)

Service cost
   $ 16    $ 16    $ 48    $ 48
Interest cost
   44    43    132    128
Amortization of prior service credit
   (2 )    (2 )    (7 )    (7 )
Net actuarial loss (gain)
   —      —      54    (228 )








Total net periodic postretirement benefit cost (credit)
   $ 58    $ 57    $ 227    $ (59 )


	For the Three Months Ended						For the Six Months Ended

	July 2, 2023			July 3, 2022			July 2, 2023			July 3, 2022

	(in thousands)
Service cost	$	8		$	15		$	17		$	32
Interest cost		60			45			121			88
Amortization of prior service credit		(2	)		(2	)		(4	)		(4	)
Special termination benefits		369			—			369			—
Net actuarial loss		30			54			30			54

Total net periodic postretirement benefit cost	$	465		$	112		$	533		$	170

Q.P. COMMITMENTS AND CONTINGENCIES

Purchase Commitments

As of ~~October~~July 2, ~~2022,~~2023, Teradyne had entered into purchase commitments for certain components and materials. The purchase commitments covered by the agreements aggregate to approximately ~~$887.1~~$554.5 million, of which ~~$808.3~~$482.4 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, 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 ~~charters.~~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.

~~Table of Contents~~

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

Table of Contents

and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred. As of ~~October~~July 2, ~~2022~~2023 and December 31, ~~2021,~~2022, Teradyne had a product warranty accrual of ~~$14.1~~$12.5 million and ~~$24.6~~$14.2 million, respectively, included in other accrued liabilities and revenue deferrals related to extended warranties of ~~$61.9~~$44.4 million and ~~$64.2~~$56.2 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 ~~October~~July 2, ~~2022~~2023 and December 31, ~~2021,~~2022, except for product warranty, Teradyne has not recorded any liabilities for these guarantees and obligations because the amount would be immaterial.

R.Q. INCOME TAXES

A reconciliation of the United States federal statutory corporate tax rate to Teradyne’s effective tax rate was as follows:


	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended						For the Six Months Ended
	October 2, 2022			October 3, 2021			October 2, 2022			October 3, 2021
													July 2, 2023			July 3, 2022			July 2, 2023			July 3, 2022
U.S. statutory federal tax rate		21.0	%		21.0	%		21.0	%		21.0	%		21.0	%		21.0	%		21.0	%		21.0	%
Discrete expense related to foreign currency gain/loss														1.2			0.6			0.7			0.6
Non-deductible officers’ compensation		1.8			0.8			1.4			0.8			1.0			1.4			1.0			1.3
International provisions of the U.S. Tax Cuts and Jobs Act of 2017														(2.5	)		(1.0	)		(2.8	)		(1.2	)
Tax credits														(2.4	)		(2.0	)		(2.4	)		(1.8	)
Discrete benefit related to equity compensation														(0.1	)		(0.2	)		(1.4	)		(2.9	)
Foreign taxes		(0.7	)		(4.4	)		(2.4	)		(4.4	)		(1.0	)		(3.2	)		(0.8	)		(3.3	)
Tax credits		(2.1	)		(1.9	)		(1.9	)		(1.4	)
International provisions of the U.S. Tax Cuts and Jobs Act of 2017		(1.4	)		(1.5	)		(1.2	)		(1.6	)
Discrete benefit related to equity compensation		(0.1	)		(0.1	)		(1.9	)		(1.6	)
Other, net		0.4			(0.1	)		0.8			(0.1	)		(0.3	)		0.5			0.4			0.4

Effective tax rate		18.9	%		13.8	%		15.8	%		12.7	%		16.9	%		17.1	%		15.7	%		14.1	%

On a quarterly basis, Teradyne evaluates the realizability of the deferred tax assets by jurisdiction and assesses the need for a valuation allowance. As of ~~October~~July 2, ~~2022,~~2023, Teradyne believes that it will ultimately realize the deferred tax assets recorded on the condensed consolidated balance sheet. However, should Teradyne believe that it is

more-likely-than-not

that the deferred tax assets would not be realized, the tax provision would increase in the period in which Teradyne determined that the realizability was not likely. Teradyne considers the probability of future taxable income and historical profitability, among other factors, in assessing the realizability of the deferred tax assets.

As of ~~October~~July 2, ~~2022~~2023 and December 31, ~~2021,~~2022, Teradyne had ~~$14.8~~$15.9 million and ~~$14.5~~$15.6 million, respectively, of reserves for uncertain tax positions. The $0.3 million net increase in reserves for uncertain tax positions ~~consists of an increase~~is related to U.S. federal research and development credits generated in the current ~~year partially offset by the release of reserves related to~~

~~prior year loss carryforwards.~~year.

As of ~~October~~July 2, ~~2022,~~2023, Teradyne ~~does not anticipate a material change in~~estimates that it is reasonably possible that the balance of unrecognized tax benefits ~~during~~may decrease approximately $0.1 million in the next twelve ~~months.~~

months because of a lapse of statutes of limitation. The estimated decrease relates to U.S. state research and development credits.

~~Table of Contents~~

Teradyne

recognizes interest and penalties related to income tax matters in income tax expense. As of ~~October~~July 2, ~~2022~~2023 and December 31, ~~2021, $0.4~~2022, $0.5 million and ~~$0.3~~$0.4 million, respectively, of interest and penalties were accrued for uncertain tax positions. For the ~~nine~~six months ended ~~October~~July 2, 2023 and July 3, 2022, ~~and October 3, 2021,~~an expense

of $0.1 million and ~~$0.3~~$0.1 million, respectively, w

~~ere~~

was recorded for interest and penalties related to income tax items.

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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 due to the tax holiday for the ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023, was ~~$9.7~~

1.0

million, or ~~$0.05~~ $

0.01

per diluted share. The tax savings due to the tax holiday for the ~~nine~~six months ended ~~October~~July 3, ~~2021~~ 2022

was ~~$23.9~~$

8.3

million, or ~~$0.13~~ $

0.05

per diluted share. In November 2020, Teradyne entered into an agreement with the Singapore Economic Development Board which extended ~~its~~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.

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.

R. SEGMENT INFORMATION

Teradyne has four reportable segments (Semiconductor Test, System Test, ~~Industrial Automation~~Wireless Test and ~~Wireless Test)~~Robotics). Each of the reportable segments ~~is also~~represents an individual operating segment.

The Semiconductor Test segment includes operations related to the design, manufacturing and marketing of semiconductor test products and services. The System Test segment includes operations related to the design, manufacturing and marketing of products and services for defense/aerospace instrumentation test, storage and system level test, and circuit-board test. The ~~Industrial Automation~~Wireless Test segment includes operations related to the design, manufacturing and marketing of wireless test products and services. The Robotics segment includes operations related to the design, manufacturing and marketing of collaborative robotic arms, autonomous mobile robots and advanced robotic control software. ~~The Wireless Test segment includes operations related to the design, manufacturing and marketing of wireless test products and services.~~ Each operating segment has a segment manager who is accountable to and maintains regular contact with Teradyne’s chief operating decision maker (Teradyne’s chief executive officer) to discuss operating activities, financial results, forecasts and plans for the segment.

Teradyne evaluates performance based on several factors, of which the primary financial measure is business segment income (loss) before income taxes. The accounting policies of the business segments ~~in effect~~ are the same as those described in Note B: “Accounting Policies” in Teradyne’s Annual Report on Form

10-K

for the year ended December 31, ~~2021.~~2022.

~~Table of Contents~~

Segment information for the three and ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021~~2022 is as follows:


	Semiconductor Test		System Test		Industrial Automation			Wireless Test		Corporate and Eliminations			Consolidated		Semiconductor Test		System Test		Robotics			Wireless Test		Corporate and Eliminations			Consolidated
	(in thousands)
Three Months Ended October 2, 2022
															(in thousands)
Three Months Ended July 2, 2023
Revenues	$	575,704	$	116,154	$	89,067		$	46,148	$	—		$	827,073	$	474,708	$	94,272	$	71,634		$	43,823	$	—		$	684,437
Income (loss) before income taxes (1)(2)		182,625		40,201		(3,992	)		12,647		(5,284	)		226,197		129,040		28,599		(26,401	)		12,020		1,144			144,402
Total assets (3)		1,366,478		192,684		614,558			110,484		1,035,702			3,319,906		1,416,109		191,002		685,132			88,869		1,013,784			3,394,896
Three Months Ended October 3, 2021
Three Months Ended July 3, 2022
Revenues	$	688,232	$	102,605	$	91,014		$	68,713	$	(63	)	$	950,501	$	541,348	$	134,702	$	101,055		$	63,854	$	(193	)	$	840,766
Income (loss) before income taxes (1)(2)		265,017		31,773		(4,226	)		31,726		(26,535	)		297,755		177,782		54,042		(6,406	)		25,393		(12,219	)		238,592
Total assets (3)		1,251,549		147,970		696,792			119,568		1,546,303			3,762,182		1,449,878		229,359		644,099			118,445		1,046,645			3,488,426
Nine Months Ended October 2, 2022
Six Months Ended July 2, 2023
Revenues	$	1,599,392	$	369,525	$	292,772		$	161,520	$	—		$	2,423,209	$	889,717	$	168,903	$	160,848		$	82,498	$	—		$	1,301,966
Income (loss) before income taxes (1)(2)		510,112		135,566		(15,496	)		56,659		(41,693	)		645,148		225,225		43,874		(44,891	)		21,372		(4,094	)		241,486
Total assets (3)		1,366,478		192,684		614,558			110,484		1,035,702			3,319,906		1,416,109		191,002		685,132			88,869		1,013,784			3,394,896
Nine Months Ended October 3, 2021
Six Months Ended July 3, 2022
Revenues	$	2,050,271	$	340,261	$	263,151		$	164,504	$	(352	)	$	2,817,835	$	1,023,688	$	253,371	$	204,244		$	115,372	$	(539	)	$	1,596,136
Income (loss) before income taxes (1)(2)		778,687		116,788		(14,586	)		63,810		(38,925	)		905,774		327,487		95,365		(11,504	)		44,012		(36,409	)		418,951
Total assets (3)		1,251,549		147,970		696,792			119,568		1,546,303			3,762,182		1,449,878		229,359		644,099			118,445		1,046,645			3,488,426

(1)

Included in Corporate and Eliminations are: ~~legal and environmental fees, contingent consideration fair value adjustments,~~ interest income, interest expense, ~~severance charges,~~ net foreign exchange gains (losses), ~~acquisition related charges and compensation, pension,~~ intercompany eliminations, legal and environmental fees, severance charges, pension, and an expense for the ~~three and nine months ended October 3, 2021, loss on convertible debt conversions.~~modification of Teradyne’s former chief executive officer’s outstanding equity awards.

(2)	Included in income (loss) before taxes are charges ~~and credits~~ related to restructuring and other, and inventory ~~charges and, for the three and nine months ended October 3, 2021, loss on convertible debt conversions.~~charges.

(3)	Total assets are attributable to each segment. Corporate assets consist of cash and cash equivalents, marketable securities, and certain other assets.

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Included in each segment are charges and credits in the following line items in the statements of operations:


										For the Three Months Ended				For the Six Months Ended

	For the Three Months Ended				For the Nine Months Ended					July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
	October 2, 2022		October 3, 2021		October 2, 2022		October 3, 2021
	(in thousands)									(in thousands)
Semiconductor Test:
Cost of revenues—inventory charge	$	10,829	$	3,725	$	13,144	$	4,959		$	4,184	$	2,071	$	7,952	$	2,315
Industrial Automation:
Restructuring and other—employee severance											2,485		—		3,279
System Test:
Cost of revenues—inventory charge										$	—	$	—	$	1,113	$	—
Restructuring and other—employee severance											—		—		642		—
Robotics:
Restructuring and other—employee severance	$	1,074	$	—	$	1,616	$	965		$	1,638	$	—	$	2,071	$	—
Cost of revenues—inventory charge		—		3,656		1,411		4,941			769		831		1,551		1,197
Restructuring and other—acquisition related expenses and compensation		—		—		—		825
Wireless:
Cost of revenues—inventory charge	$	966	$	679	$	3,942	$	1,351
System Test:
Cost of revenues—inventory charge	$	—	$	—	$	—	$	524		$	—	$	2,099	$	725	$	2,976
Corporate and Eliminations:
Restructuring and other—other	$	700	$	—	$	2,700	$	1,846		$	1,100		1,500		1,100		2,000
Restructuring and other—employee severance											—		—		1,124		—
Selling and administrative—equity modification charge											—		—		5,889		—
Restructuring and other—legal settlement charge		—		—		14,700		—			—		—		—		14,700
Other (income) expense, net—loss on convertible debt conversions		—		20,153		—		25,397
Restructuring and other—AutoGuide contingent consideration adjustment		—		—		—		(7,227	)
Restructuring and other—acquisition related expenses and compensation		—		—		—		(513	)

~~Table of Contents~~

T.S. SHAREHOLDERS’ EQUITY

Stock Repurchase Program

In January ~~2021,~~2023, Teradyne’s Board of Directors cancelled its January 2021 repurchase program and approved a new repurchase program for up to $2.0 billion of common stock. Teradyne intends to repurchase up to $500.0 million of its common stock in 2023 based on market conditions.

During the ~~nine~~six months ended ~~October~~July 2, ~~2022,~~2023, Teradyne repurchased ~~7.2~~2.2 million shares of common stock for ~~$750.0~~a total cost of $229.5 million at an average price of ~~$103.83~~$102.35 per share. As of January 1, 2023, share repurchases in excess of issuances are subject to a 1% excise tax, which is i

cluded

part of the cost basis of the shares acquired.

During the ~~nine~~six months ended ~~October~~July 3, ~~2021,~~2022, Teradyne repurchased ~~3.3~~5.0 million shares of common stock for ~~$406.2~~$532.8 million at an average price of ~~$123.53~~$107.50 per share. The cumulative repurchases under the $2.0 billion common stock repurchase program as of October 2, 2022 were 12.0 million shares of common stock for $1,350.0 million at an average price per share of $112.55.

The total ~~price~~cost of shares acquired includes commissions and, starting in 2023, related excise tax, and is recorded as a reduction to retained earnings.

Dividend

Holders of Teradyne’s common stock are entitled to receive dividends when they are declared by Teradyne’s Board of Directors.

In January ~~2022,~~2023 and May 2023, Teradyne’s Board of Directors declared a quarterly cash dividend of $0.11 per share. Dividend payments for the three and six months ended July 2, 2023

were $17.0 million and $34.2 million, respectively.

In January 2022 and ~~August~~May 2022, Teradyne’s Board of Directors declared a quarterly cash dividend of $0.11 per share. Dividend payments for the three and ~~nine~~six months ended ~~October 2,~~July 3, 2022

were ~~$17.1~~$17.5 million and ~~$52.6~~$35.4 million, respectively.

In January 2021, May 2021 and August 2021, Teradyne’s Board of Directors declared a quarterly cash dividend of $0.10 per share. Dividend payments for the three and nine months ended October 3, 2021 were $16.4 million and $49.7 million, respectively.

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.27

~~U. SUBSEQUENT EVENT~~

~~On October 5, 2022, Teradyne amended its existing credit agreement to increase the amount of its senior secured revolving credit facility to $750 million from $400 million.~~

Item 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Statements in this Quarterly Report on Form

10-Q

which are not historical facts, so called “forward-looking statements,” are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those detailed in our filings with the Securities and Exchange Commission. See also Part II, Item 1A of this Quarterly Report on Form

10-Q

and Part I, Item 1A “Risk Factors” in our Annual Report on Form

10-K

for the year ended December 31, ~~2021.~~2022. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements, except as may be required by law.

Overview

We are a leading global supplier of ~~automation~~automated test equipment ~~for test~~ and ~~industrial applications.~~robotics solutions. We design, develop, manufacture and sell automatic test systems and robotics products. Our automatic test systems are used to test semiconductors, wireless products, data storage and complex electronics systems in many industries including the consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Our ~~industrial automation~~robotics products include collaborative robotic arms and autonomous mobile robots (“AMRs”) ~~and advanced robotic control software~~ used by global manufacturing, logistics and ~~light~~ industrial customers to improve quality, increase manufacturing and material handling efficiency and decrease manufacturing and logistics costs. Our automatic test equipment and ~~industrial automation~~robotics products and services include:

semiconductor test (“Semiconductor Test”) systems;

wireless test (“Wireless Test”) systems; and

~~industrial automation~~

robotics (“~~Industrial Automation”~~Robotics”) products.

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 test products both through direct sales and sales to the customers’ 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 ~~2022, we expect lower~~the second quarter of 2023, the demand in ~~the mobility and compute segments of~~ our Semiconductor Test business ~~due~~continued to ~~end market~~be impacted by a correction cycle driven by excess semiconductor inventory, primarily in the mobility segment of the market. The depth of this slowdown and the timing of the recovery are uncertain, however, strong automotive demand and in Memory test, the growth of DDR5 and High Bandwidth Memory (“HBM”) devices for data center applications are partially offsetting these ~~segments as well as slower technology transition in one of our largest~~ ~~end-markets.~~ ~~While there is uncertainty if end markets will recover in 2023,~~declines. Over the midterm we expect the ramp of 3 nanometer ~~starting in 2023 followed by~~ and gate-all-around ~~and~~ process technology, increasing multichip packaging, ~~remain drivers of growth. We expect Semiconductor Test~~additional device complexity and unit growth will drive additional demand ~~in the automotive and industrial segments to remain strong in 2022.~~

for test.

Our ~~Industrial Automation~~Robotics segment consists of Universal Robots A/S (“UR”), a leading supplier of collaborative robotic arms and Mobile Industrial Robots A/S (“MiR”), a leading maker of AMRs for industrial automation. The market for our ~~Industrial Automation~~Robotics segment products is dependent on the adoption of new automation technologies by large manufacturers as well as small and medium enterprises ~~(SMEs)~~(“SMEs”) throughout the world.

In the second quarter of 2023, Robotics demand has softened significantly due to slowing global industrial activity and macro-economic headwinds.

In the second quarter of 2023, we met customer demand, in part, through faster than expected recoveries from supply chain constraints, while inflation had minimal effects on our results. Both our test and ~~industrial automation~~robotics businesses may ~~continue to~~still be ~~impacted~~influenced by supply constraints during the remainder of 2023, which ~~will in turn~~could impact our revenue and ~~is expected to increase costs in 2022. Through the~~costs. For example, our third quarter of 2022, inflation has not had a material impact on our results. In the third quarter 2022, we were unable to supply approximately $10 million of revenue in our test businesses for which we had customer demand. Our fourth quarter 20222023 forecast excludes approximately ~~$15~~$35 million of revenue, primarily in our test businesses, due to these continued supply chain constraints.

Our financial statements are denominated in U.S. dollars. While the majority of our revenues are in U.S. dollars, approximately 70 percent of our ~~Industrial Automation~~Robotics revenue is denominated in foreign currencies. In ~~the third quarter of~~ 2022, the strengthening of the U.S. dollar was a factor in lower than forecasted revenues in our ~~Industrial Automation~~Robotics segment. ~~Continued strengthening~~Strengthening of the U.S. dollar ~~may adversely impact~~would negatively affect Robotics revenue growth in ~~the fourth quarter~~2023.

Table of ~~2022.~~

Contents

Our corporate strategy continues to focus on profitably gaining market share in our test businesses through the introduction of differentiated products that target expanding segments and accelerating growth through continued investment in our ~~Industrial Automation~~Robotics businesses. We plan to execute on our strategy while balancing capital allocations between returning capital to our shareholders through stock repurchases and dividends and using capital for opportunistic acquisitions.

Impact of the

COVID-19

Pandemic on our Business

The novel coronavirus

(COVID-19)

pandemic resulted in government authorities implementing numerous measures in an effort to contain the spread of the virus, such as travel bans and restrictions, limitations on gatherings or social distancing requirements, quarantines,

shelter-in-place

orders, vaccination and testing mandates, and business limitations and shutdowns. These measures ~~have~~ impacted our

day-to-day

operations and disrupted our business, workforce and operations, as well as the operations of our customers, contract manufacturers and suppliers. ~~We are continuing to monitor~~In the ~~rapidly evolving situation regarding~~second quarter of 2023 the

COVID-19

pandemic ~~particularly~~had significantly less impact on our business than in ~~China, and~~prior quarters since the ~~availability and impact~~start of ~~vaccinations globally.~~the pandemic in 2020. However, we are unable to accurately predict the ~~full~~future impact of

COVID-19,

which will depend on future developments that are highly uncertain and cannot be predicted with accuracy, including, but not limited to, any new surges or new strains or variants of the virus in areas where we do business, the availability and use of vaccinations, any further government actions to contain the virus or treat its impact, continuing shutdowns in China, and how quickly and to what extent normal economic and operating conditions can resume.

business.

Due to the

COVID-19

pandemic, there has been uncertainty and disruption in the global economy and our markets. We are not aware of any specific event or circumstance that would require an update to our estimates or judgments or a revision of the carrying value of our assets or liabilities as of ~~November~~August 4, ~~2022,~~2023, the date of issuance of this Quarterly Report on Form

10-Q.

~~Health and Safety~~

~~In response to the~~ ~~COVID-19~~ pandemic, we have taken proactive, aggressive action to protect the health and safety of our employees, customers, contract manufacturers and suppliers, and we have complied with all government orders around the globe. The spread of ~~COVID-19~~ has caused us to modify our business practices, which includes implementing social distancing protocols, limiting employee travel and requiring employees to work remotely. We may take further actions as may be required or recommended by government authorities or that we determine are in the best interests of our employees, customers, contract manufacturers and suppliers.

~~Operations~~

We believe the

COVID-19

pandemic and the numerous measures implemented by authorities in response, ~~has~~ adversely impacted our results of operations, including by increasing costs, but we cannot accurately estimate the amount of the impact to our ~~third quarter of 2022 financial results or to our future~~ financial results. In addition, the pandemic ~~has~~ disrupted our contract manufacturers and suppliers, and ~~has~~ resulted in supply constraints and in short-term cost increases to meet customer demand. While the duration and severity of the pandemic may further impact our workforce and operations, as well as those of our customers, contract manufacturers and suppliers, we expect that our manufacturing facilities will remain operational, at sufficient capacity to support production based on demand and the availability of supply. We are monitoring our operations closely in an effort to avoid any potential productivity losses caused by responses to the ~~COVID-19~~ ~~pandemic.~~

~~Demand~~

~~The~~ ~~COVID-19~~ ~~pandemic significantly increased economic uncertainty in our markets. Demand for our Test products in China and other countries was strong throughout 2021, but the~~ ~~COVID-19~~ ~~pandemic could cause further economic disruption that could cause demand for our products to decline, which would adversely affect our business.~~

~~Liquidity~~

~~Although there is continued uncertainty related to the impact of the~~ ~~COVID-19~~ pandemic on our future results, we believe our business model and our current cash reserves leave us well-positioned to manage our business through this crisis. We have a strong balance sheet, as well as an operating model that we believe is capable of flexing up and down with extreme demand swings while still remaining profitable. Based on our analysis, we believe our existing balances of cash and cash equivalents and our currently anticipated operating cash flows will be sufficient to meet our working capital needs and other capital and liquidity requirements for the next twelve months. However, due to the uncertainty related to the future impact of the ~~COVID-19~~ pandemic, in order to bolster our liquidity position, on May 1, 2020 we entered into a credit agreement providing for a three-year, senior secured revolving credit facility of $400 million. On December 10, 2021, we amended the credit agreement to extend its maturity to December 10, 2026 as further described in Note H: “Debt.” As described in Note U: “Subsequent Event”, the credit facility was increased to $750 million on October 5, 2022. As of November 4, 2022, we have not borrowed any funds under the credit facility.

~~We are continuing to monitor the evolving situation regarding the~~ ~~COVID-19~~ pandemic, the availability of vaccinations where we do business and guidance from government authorities around the world. In these circumstances, there may be developments outside our control requiring us to adjust our operating plan. As a result, given the uncertain nature of this situation, we are not able to accurately predict the full extent of the impact of ~~COVID-19~~ ~~on our business, financial condition, results of operations, liquidity, or cash flows in the future.~~

Supply Chain Constraints and Inflationary Pressures

The global supply shortage of electrical components, including semiconductor chips, continued to impact our supply chain in the ~~third~~second quarter of ~~2022. As a result,~~2023. We are seeing improvements related to supply constraints however, we experienced, and expect to continue to experience through the remainder of 2023, increases in our lead times and costs for certain components for certain of our products. In addition, while not material, inflationary pressures contributed to increased costs for product components and wage inflation, impacting our cost of products, gross margin and profit for the quarter. Our supply chain team, and our suppliers, continue to manage numerous supply, production, and logistics obstacles. While not material through the ~~third~~second quarter of ~~2022,~~2023, in an effort to mitigate these risks, in some cases, we have incurred higher costs due to investment in supply chain resiliency and to secure available inventory or have extended or placed

non-cancellable

purchase commitments with semiconductor suppliers, which introduces inventory risk if our forecasts and assumptions prove inaccurate. We have also sourced components from additional suppliers and multi-sourced and

pre-ordered

components and finished goods inventory in some cases in an effort to reduce the impact of the adverse supply chain conditions we have experienced. There is no assurance that these efforts will be successful. ~~In the~~Our third quarter ~~2022, we were unable to supply approximately $10 million of revenue in our test businesses for which we had customer demand. Our fourth quarter 2022~~2023 forecast excludes approximately ~~$15~~$35 million of revenue, primarily in our test businesses, due to these continued supply chain constraints.

~~Impact of Russia’s invasion of Ukraine on our Business~~

Russia’s invasion of Ukraine, in February 2022, did not have a significant impact on our business as we have minimal business in Russia and Ukraine, both directly and indirectly. However, following the invasion, the U.S. and other countries imposed significant sanctions against the Russian government and many Russian companies and individuals. Although we do not have significant operations in Russia, the sanctions and Russia’s response to the sanctions, have impacted our business in other countries and could have a negative impact on our future revenue and supply chain, either of which could adversely affect our business and financial results. In addition, the global economic uncertainty following the invasion, sanctions and Russia’s response to the sanctions could impact demand for our products.

~~Impact of October 7, 2022 U.S. Department of Commerce Regulations on our Business~~

On October 7, 2022, the U.S. Department of Commerce published new 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 new restrictions are lengthy and complex. We continue to assess the impact of these regulations on our business. We have determined that restrictions on the sale of semiconductor testers in China to test certain advanced semiconductors will impact our sales to certain companies in China. Several multinational companies manufacturing these advanced semiconductors in China have obtained ~~one-year~~ licenses allowing suppliers such as Teradyne to continue to provide testers to the facilities operated by these companies. We expect that other companies manufacturing advanced semiconductors in China will not receive licenses, thereby restricting our ability to provide testers to the facilities operated by these companies that do not receive a license. We also are assessing the filing of license requests to sell to and support certain customers in China for certain end uses that, if granted, may reduce the impact of these restrictions on our business. At this time, we do not know the impact these end user and end use restrictions will have on our business in China or on future revenues. In addition to the specific restrictions impacting our business, the regulations may 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. We also have determined that the restrictions on the export of certain US origin components and technology for use in the development and production in China of certain semiconductor manufacturing equipment impact our manufacturing and development operations in China. We have received a temporary authorization from the U.S. Department of Commerce allowing us to continue our manufacturing and development operations in China until the U.S. Department of Commerce issues a license to replace this temporary authorization. We will file an application with the U.S. Department of Commerce for a license to replace the temporary authorization by November 17, 2022. We cannot assess the likelihood or timing of receiving this license. In addition to requesting a license, we are implementing procedures for minimizing the impact of these new regulations on our operations in China, but there is no assurance that these procedures will succeed.

See Part II—Item 1A, “Risk Factors,” included in our Annual Report on Form

10-K

for the fiscal year ended December 31, ~~2021~~2022 for our risk factors regarding risks associated with both the

COVID-19

pandemic and international conflicts.

Critical Accounting Policies and Estimates

We have identified the policies which are critical to understanding our business and our results of operations. There have been no significant changes during the ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023, to the items disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form

10-K

for the fiscal year ended December 31, ~~2021,~~2022, except as noted below.

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.

~~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~~. ~~Under 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. We use the ~~if-converted~~ method in the diluted EPS calculation for convertible instruments. As a result of adoption, we 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.~~

Preparation of Financial Statements and Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and judgments that affect the amounts reported in the financial statements. Actual results may differ significantly from these estimates under different assumptions or conditions.

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SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

   For the Three Months
Ended For the Nine Months
Ended
   October 2,
2022 October 3,
2021 October 2,
2022 October 3,
2021
Percentage of revenues:

Revenues:

Products
   82 % 87 % 83 % 87 %
Services
   18 13 17 13


Total revenues
   100 100 100 100
Cost of revenues:

Cost of products
   34 35 33 35
Cost of services
   8 5 7 5


Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)
   41 40 40 40


Gross profit
   59 60 60 60
Operating expenses:

Selling and administrative
   16 14 17 14
Engineering and development
   14 11 14 11
Acquired intangible assets amortization
   1 1 1 1
Restructuring and other
   —   —   1 —


Total operating expenses
   31 26 32 26


Income from operations
   28 34 27 34
Non-operating (income) expense:

Interest income
   —   —   —   —
Interest expense
   —   —   —   1
Other (income) expense, net
   1 2 1 1


Income before income taxes
   27 31 27 32
Income tax provision
   5 4 4 4


Net income
   22 % 27 % 22 % 28 %


	For the Three Months Ended						For the Six Months Ended

	July 2,			July 3,			July 2,			July 3,
	2023			2022			2023			2022

Percentage of revenues:
Revenues:
Products		79	%		83	%		78	%		83	%
Services		21			17			22			17

Total revenues		100			100			100			100
Cost of revenues:
Cost of products		32			33			32			32
Cost of services		9			7			10			7

Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)		41			40			42			40

Gross profit		59			60			58			60
Operating expenses:
Selling and administrative		21			17			23			18
Engineering and development		15			13			16			14
Acquired intangible assets amortization		1			—			1			1
Restructuring and other		1			—			1			1

Total operating expenses		38			31			40			33

Income from operations		20			29			18			27
Non-operating (income) expense:
Interest income		(1	)		—			(1	)		—
Interest expense		—			—			—			—
Other (income) expense, net		—			1			—			1

Income before income taxes		21			28			19			26
Income tax provision		4			5			3			4

Net income		18	%		24	%		16	%		23	%

Results of Operations

~~Third~~

Second Quarter ~~2022~~2023 Compared to ~~Third~~Second Quarter ~~2021~~

2022

Revenues

Revenues by our reportable segments were as follows:

   For the Three Months
Ended
   October 2,
2022    October 3,
2021    Dollar
Change

   (in millions)
Semiconductor Test
   $ 575.7    $ 688.2    $ (112.5 )
System Test
   116.2    102.6    13.6
Industrial Automation
   89.1    91.0    (1.9 )
Wireless Test
   46.1    68.7    (22.6 )
Corporate and Eliminations
   —      (0.1 )    0.1






   $ 827.1    $ 950.5    $ (123.4 )


	For the Three Months Ended
	July 2,		July 3,			Dollar
	2023		2022			Change

	(in millions)
Semiconductor Test	$	474.7	$	541.3		$	(66.6	)
System Test		94.3		134.7			(40.4	)
Robotics		71.6		101.1			(29.5	)
Wireless Test		43.8		63.9			(20.1	)
Corporate and Eliminations		—		(0.2	)		0.2

	$	684.4	$	840.8		$	(156.4	)

The decrease in Semiconductor Test revenues of ~~$112.5~~$66.6 million, or ~~16.3%~~12.3%, was driven primarily by lower tester sales ~~in mobile~~for Mobility applications, partially offset by higher ~~memory~~Memory test ~~sales.~~sales in Flash Final Test. The ~~increase~~decrease in System Test revenues of ~~$13.6~~$40.4 million, or ~~13.3%~~30.0%, was primarily due to ~~higher~~lower sales in Storage Test of system level and hard disk drive ~~testers.~~testers, partially offset by higher sales in Defense/Aerospace. The decrease in ~~Industrial Automation~~Robotics revenues of ~~$1.9~~$29.5 million, or ~~2.1%~~29.2%, was driven primarily by ~~changes in foreign exchange rates.~~softening demand due to slowing global industrial activity and macro-economic headwinds and the impact of the transformation of Universal Robots distribution channel. The decrease in Wireless Test revenues of ~~$22.6~~$20.1 million, or ~~32.9%~~31.5%, was primarily due to a decrease in connectivity ~~and cellular~~ test ~~product sales.~~

products.

Table of Contents

Revenues by country as a percentage of total revenues were as follows (1):

   For the Three Months
Ended
   October 2,
2022 October 3,
2021
Taiwan
   23 % 27 %
Korea
   18 8
China
   16 19
United States
   14 11
Europe
   7 8
Philippines
   5 5
Thailand
   4 3
Malaysia
   4 6
Japan
   4 5
Singapore
   3 5
Rest of World
   2 3


   100 % 100 %


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

United States		17	%		14	%
Korea		15			17
Taiwan		15			25
China		13			13
Japan		13			5
Europe		9			8
Malaysia		5			5
Thailand		4			6
Philippines		4			3
Singapore		3			2
Rest of World		2			2

		100	%		100	%

(1)	Revenues attributable to a country are based on location of customer site.

Gross Profit

Our gross profit was as follows:

   For the Three Months
Ended
   October 2,
2022 October 3,
2021 Dollar/Point
Change

   (in millions)
Gross profit
   $ 485.4 $ 571.0 $ (85.6 )
Percent of total revenues
   58.7 % 60.1 % (1.4 )


	For the Three Months Ended
	July 2,			July 3,			Dollar/Point
	2023			2022			Change

	(in millions)
Gross profit	$	402.5		$	506.4		$	(103.9	)
Percent of total revenues		58.8	%		60.2	%		(1.4	)

Gross profit as a percent of revenue decreased by 1.4 points, primarily due to lower ~~volume and product mix in Semiconductor Test and higher inventory reserves.~~

volume.

Selling and Administrative

Selling and administrative expenses were as follows:

   For the Three Months
Ended
   October 2,
2022 October 3,
2021 Dollar
Change

   (in millions)
Selling and administrative
   $ 135.6 $ 134.8 $ 0.8
Percent of total revenues
   16.4 % 14.2 %


	For the Three Months Ended
	July 2,			July 3,			Dollar
	2023			2022			Change

	(in millions)
Selling and administrative	$	145.7		$	139.5		$	6.2
Percent of total revenues		21.3	%		16.6	%

The increase of ~~$0.8~~$6.2 million in selling and administrative expenses was primarily ~~driven by Semiconductor Test and Industrial Automation increase in headcount and greater spending, partially offset by lower~~due to higher variable compensation.

Table of Contents

Engineering and Development

Engineering and development expenses were as follows:

   For the Three Months
Ended
   October 2,
2022 October 3,
2021 Dollar
Change

   (in millions)
Engineering and development
   $ 111.7 $ 107.2 $ 4.5
Percent of total revenues
   13.5 % 11.3 %


	For the Three Months Ended
	July 2,			July 3,			Dollar
	2023			2022			Change

	(in millions)
Engineering and development	$	105.7		$	112.0		$	(6.3	)
Percent of total revenues		15.4	%		13.3	%

The ~~increase~~decrease of ~~$4.5~~$6.3 million in engineering and development expenses was primarily ~~driven by~~due to lower spending in Semiconductor Test, ~~and Industrial Automation increase in headcount and greater spending,~~ partially offset by ~~lower variable compensation.~~

higher spending in Robotics.

Restructuring and Other

During the three months ended ~~October~~July 2, ~~2022,~~2023, we recorded ~~$1.2~~$5.1 million of severance charges related to headcount reductions of 112 people primarily in ~~Industrial Automation,~~Semiconductor Test and Robotics which included charges related to a voluntary early retirement program for employees meeting certain conditions and a charge of ~~$0.7~~$1.1 million for an increase in ~~legal liabilities.~~

environmental liability.

During the three months ended ~~October~~July 3, ~~2021,~~2022, we recorded ~~$0.6~~a charge of $1.5 million ~~of severance charges primarily~~for an increase in ~~Industrial Automation.~~

environmental and legal liabilities.

Interest and Other

   For the Three Months
Ended
   October 2,
2022    October 3,
2021    Dollar
Change

   (in millions)
Interest income
   $ (1.3 )    $ (0.6 )    $ (0.7 )
Interest expense
   0.8    3.8    (3.0 )
Other (income) expense, net
   5.8    21.5    (15.7 )


	For the Three Months Ended
	July 2,			July 3,			Dollar
	2023			2022			Change

	(in millions)
Interest income	$	(6.4	)	$	(1.0	)	$	(5.4	)
Interest expense		1.0			0.9		$	0.1
Other (income) expense, net		0.8			9.4		$	(8.6	)

Interest ~~expense decreased~~income increased by ~~$3.0~~$5.4 million primarily due to ~~the January 1, 2022 adoption of ASU~~ ~~2020-06~~ ~~which eliminated the amortization of the debt discount which was $2.3 million~~higher interest rates in ~~the three months ended October 3, 2021.~~2023. Other (income) expense, net decreased by ~~$15.7~~$8.6 million primarily due to ~~lower losses on convertible debt conversions partially offset by~~ changes in unrealized gains/losses on equity securities, from a ~~$0.4~~$6.6 million loss in ~~2021~~2022 to a ~~$2.2~~$2.6 million ~~loss~~gain in ~~2022.~~

2023.

Income (Loss) Before Income Taxes

   For the Three Months
Ended
   October 2,
2022    October 3,
2021    Dollar
Change

   (in millions)
Semiconductor Test
   $ 182.6    $ 265.0    $ (82.4 )
System Test
   40.2    31.8    8.4
Wireless Test
   12.6    31.7    (19.1 )
Industrial Automation
   (4.0 )    (4.2 )    0.2
Corporate and Eliminations (1)
   (5.3 )    (26.5 )    21.2






   $ 226.2    $ 297.8    $ (71.6 )


	For the Three Months Ended
	July 2,			July 3,			Dollar
	2023			2022			Change

	(in millions)
Semiconductor Test	$	129.0		$	177.8		$	(48.8	)
System Test		28.6			54.0			(25.4	)
Wireless Test		12.0			25.4			(13.4	)
Robotics		(26.4	)		(6.4	)		(20.0	)
Corporate and Eliminations (1)		1.1			(12.2	)		13.3

	$	144.4		$	238.6		$	(94.2	)

(1)

Included in Corporate and Eliminations are ~~legal and environmental fees,~~ interest income, interest expense, net foreign exchange gains (losses), ~~pension,~~ intercompany eliminations, ~~acquisition related charges~~legal and ~~compensation~~environmental fees, and ~~for the three months ended October 3, 2021, loss on convertible debt conversions.~~

severance charges.

The decrease in income before income taxes in Semiconductor Test was driven primarily by lower ~~revenues in mobile~~tester sales for Mobility applications, partially offset by higher ~~memory~~Memory test ~~sales.~~sales in Flash Final Test. The ~~increase~~decrease in income before income taxes in System Test was primarily due to ~~higher~~lower sales in Storage Test of system level and hard disk drive testers. The decrease in income before income taxes in Wireless Test was driven primarily by a decrease in sales of connectivity test products. The decrease in income before income taxes in Robotics was driven primarily by softening demand due to slowing global industrial activity and ~~cellular test product sales.~~

macro-economic headwinds and the impact of the transformation of Universal Robots distribution channel. The income before income taxes in Corporate and Eliminations was primarily due to changes in unrealized gains/losses on equity securities.

Table of Contents

Income Taxes

The effective tax rate for the three months ended ~~October~~July 2, 2023 and July 3, 2022, was 16.9% and ~~October 3, 2021 was 18.9% and 13.8%~~17.1%, respectively. The ~~increase~~decrease in the effective tax rate from the three months ended ~~October~~July 3, ~~2021~~2022, to the three months ended ~~October~~July 2, ~~2022 was primarily attributable~~2023, resulted from an increase in benefit from the international provisions of the U.S. Tax Cuts and Jobs Act of 2017, a reduction in

non-deductible

officers’ compensation and an increase in benefit related to tax credits. These reductions in expense were partially offset by a projected shift in the geographic distribution of income, which increases the income subject to taxation in higher tax rate jurisdictions relative to lower tax rate jurisdictions and an increase in ~~non-deductible~~ ~~officers’ compensation and a reduction in the benefit~~discrete expense related to ~~the international provisions of the U.S. Tax Cuts and Jobs Act of 2017. These increases were partially offset by an increase in benefit from tax credits.~~

~~Nine~~foreign currency gain or loss.

Six Months ~~2022~~2023 Compared to ~~Nine~~Six Months ~~2021~~

2022

Revenues

Revenues by our reportable segments were as follows:

   For the Nine Months
Ended

   October 2,
2022    October 3,
2021    Dollar
Change

   (in millions)
Semiconductor Test
   $ 1,599.4    $ 2,050.3    $ (450.9 )
System Test
   369.5    340.3    29.2
Industrial Automation
   292.8    263.2    29.6
Wireless Test
   161.5    164.5    (3.0 )
Corporate and Eliminations
   —      (0.4 )    0.4






   $ 2,423.2    $ 2,817.8    $ (394.6 )


	For the Six Months Ended
	July 2,		July 3,			Dollar
	2023		2022			Change

	(in millions)
Semiconductor Test	$	889.7	$	1,023.7		$	(134.0	)
System Test		168.9		253.4			(84.5	)
Robotics		160.8		204.2			(43.4	)
Wireless Test		82.5		115.4			(32.9	)
Corporate and Eliminations		—		(0.5	)		0.5

	$	1,302.0	$	1,596.1		$	(294.1	)

The decrease in Semiconductor Test revenues of ~~$450.9~~$134.0 million, or ~~22.0%~~13.1%, was driven primarily by lower tester sales for Mobility and Compute applications, partially offset by higher Memory test sales in ~~high performance compute processor and mobile applications.~~Flash Final Test. The ~~increase~~decrease in System Test revenues of ~~$29.2~~$84.5 million, or ~~8.6%~~33.3%, was primarily due to ~~higher~~lower sales in Storage Test of system level and hard disk drive ~~testers, and higher sales~~testers. The decrease in ~~Defense/Aerospace and in Production Board Test. The rise in Industrial Automation~~Robotics revenues of ~~$29.6~~$43.4 million, or ~~11.2%~~21.3%, was driven primarily by ~~higher~~softening demand ~~for UR’s collaborative robotic arms~~due to slowing global industrial activity and ~~MiR’s autonomous mobile robots, partially offset by changes in foreign exchange rates.~~macro-economic headwinds and the impact of the transformation of Universal Robots distribution channel. The decrease in Wireless Test revenues of ~~$3.0~~$32.9 million, or ~~1.8%~~28.5%, was primarily due to a decrease in ~~cellular test product~~ sales ~~partially offset by an increase in~~of connectivity test ~~product sales.~~

products.

Revenues by country as a percentage of total revenues were as follows (1):

   For the Nine Months
Ended
   October 2,
2022 October 3,
2021
Taiwan
   22 % 36 %
China
   16 18
Korea
   16 8
United States
   14 10
Europe
   8 7
Japan
   5 4
Thailand
   5 4
Malaysia
   5 4
Philippines
   3 5
Singapore
   3 3
Rest of World
   3 1


   100 % 100 %


	For the Six Months Ended
	July 2,			July 3,
	2023			2022

United States		17	%		15	%
Taiwan		16			22
Korea		14			15
China		12			16
Japan		11			5
Europe		10			9
Singapore		5			3
Philippines		5			3
Malaysia		4			5
Thailand		3			5
Rest of World		3			2

		100	%		100	%

(1)	Revenues attributable to a country are based on location of customer site.

Table of Contents

Gross Profit

Our gross profit was as follows:

   For the Nine Months
Ended
   October 2,
2022 October 3,
2021 Dollar/Point
Change

   (in millions)
Gross profit
   $ 1,446.7 $ 1,679.6 $ (232.9 )
Percent of total revenues
   59.7 % 59.6 % 0.1


	For the Six Months Ended
	July 2,			July 3,			Dollar/Point
	2023			2022			Change

	(in millions)
Gross profit	$	758.9		$	961.3		$	(202.4	)
Percent of total revenues		58.3	%		60.2	%		(1.9	)

Gross profit as a percent of revenue ~~increased~~decreased by ~~0.1~~1.9 points, primarily due to ~~product mix in Semiconductor Test partially offset by~~a lower volume.

Selling and Administrative

Selling and administrative expenses were as follows:

   For the Nine Months
Ended
   October 2,
2022 October 3,
2021 Dollar
Change

   (in millions)
Selling and administrative
   $ 415.4 $ 404.8 $ 10.6
Percent of total revenues
   17.1 % 14.4 %


	For the Six Months Ended
	July 2,			July 3,			Dollar
	2023			2022			Change

	(in millions)
Selling and administrative	$	296.7		$	279.7		$	17.0
Percent of total revenues		22.8	%		17.5	%

The increase of ~~$10.6~~$17.0 million in selling and administrative expenses was primarily ~~driven by~~due to the charge of $5.9 million recorded in the six months ended July 2, 2023, related to the modification of Teradyne’s chief executive officer’s outstanding equity awards in connection with his retirement and higher spending in System Test, Semiconductor Test and ~~Industrial Automation increase in headcount and greater spending, partially offset by lower variable compensation.~~

Robotics.

Engineering and Development

Engineering and development expenses were as follows:

   For the Nine Months
Ended
   October 2,
2022 October 3,
2021 Dollar
Change

   (in millions)
Engineering and development
   $ 331.8 $ 317.6 $ 14.2
Percent of total revenues
   13.7 % 11.3 %


	For the Six Months Ended
	July 2,			July 3,			Dollar
	2023			2022			Change

	(in millions)
Engineering and development	$	211.5		$	220.1		$	(8.6	)
Percent of total revenues		16.2	%		13.8	%

The ~~increase~~decrease of ~~$14.2~~$8.6 million in engineering and development expenses was due to lower variable compensation and lower spending in Semiconductor Test, partially offset by higher spending in Robotics.

Restructuring and Other

During the six months ended July 2, 2023, we recorded $7.2 million of severance charges related to headcount reductions of 179 people primarily ~~driven by~~in Semiconductor Test and ~~Industrial Automation~~Robotics which included charges related to a voluntary early retirement program for employees meeting certain conditions and a charge of $1.1 million for an increase in ~~headcount and greater spending, partially offset by lower variable compensation.~~

~~Restructuring and Other~~

environmental liability.

During the ~~nine~~six months ended ~~October 2,~~July 3, 2022, we 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, and a charge of ~~$2.7~~$2.0 million for an increase in environmental and legal ~~liabilities, and $2.1 million~~liabilities.

Table of ~~severance charges primarily in Industrial Automation. Previously, in the three months ended December 31, 2021, we recorded a charge of $12.0 million related to this~~ ~~earn-out~~ ~~dispute.~~

During the nine months ended October 3, 2021, we recorded a gain of $7.2 million for the decrease in the fair value of the AutoGuide contingent consideration liability, partially offset by a charge of $1.7 million for an increase in environmental and legal liabilities, and $1.2 million of severance charges primarily in Industrial Automation.

Contents



Massachusetts		04-2272148
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

600 Riverpark Drive, North Reading, Massachusetts		01864
(Address of Principal Executive Offices)		(Zip Code)


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




Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Emerging growth company	☐

Smaller reporting company	☐


		Page No.

PART I. FINANCIAL INFORMATION
~~Item 1.~~	~~Financial Statements (Unaudited):~~

Item 1.	~~Condensed Consolidated Balance Sheets as of October 2, 2022 and December 31, 2021~~Financial Statements (Unaudited):		1

	Condensed Consolidated Balance Sheets as of July 2, 2023 and December 31, 2022		1

	Condensed Consolidated Statements of Operations for the Three and ~~Nine~~Six Months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021~~2022		2

	Condensed Consolidated Statements of Comprehensive Income for the Three and ~~Nine~~Six Months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021~~2022		3

	Condensed ~~Consolidated~~ Statements of Convertible Common Shares and Shareholders’ Equity for the Three and ~~Nine~~Six Months ~~ended October~~Ended July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021~~2022		4

	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021~~2022		5

	Notes to Condensed Consolidated Financial Statements		6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3028

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		41
~~Item 4.~~	~~Controls and Procedures~~		4237

Item 4.	Controls and Procedures		38

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		4238

Item 1A.	Risk Factors		4238

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		4439

Item 4.	Mine Safety Disclosures		4539

Item 6.5.	~~Exhibits~~Other Information		4639

Item 6.	Exhibits		40


	October 2, 2022
	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	$	464,744	$	—	$	—	$	464,744
Cash equivalents		51,243		194,759		—		246,002
Available-for-sale securities:
U.S. Treasury securities		—		65,354		—		65,354
Corporate debt securities		—		45,864		—		45,864
Commercial paper		—		17,719		—		17,719
Debt mutual funds		6,441		—		—		6,441
U.S. government agency securities		—		4,681		—		4,681
Certificates of deposit and time deposits		—		1,205		—		1,205
Non-U.S. government securities		—		512		—		512
Equity securities:
Mutual funds		34,573		—		—		34,573

	$	557,001	$	330,094	$	—	$	887,095
Derivative assets		—		546		—		546

Total	$	557,001	$	330,640	$	—	$	887,641

Liabilities
Derivative liabilities	$	—	$	1,106	$	—	$	1,106

Total	$	—	$	1,106	$	—	$	1,106


Reported as follows:

	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	515,987	$	194,759	$	—	$	710,746
Marketable securities		—		65,310		—		65,310
Long-term marketable securities		41,014		70,025		—		111,039
Prepayments and other current assets		—		546		—		546

Total	$	557,001	$	330,640	$	—	$	887,641

Liabilities		.
Other cur r ent liabilities	$	—	$	1,106	$	—	$	1,106

Total	$	—	$	1,106	$	—	$	1,106


	October 2, 2022								December 31, 2021
	Buy Position			Sell Position		Net Total			Buy Position			Sell Position		Net Total
	(in millions)
Japanese Yen	$	(37.5	)	$	—	$	(37.5	)	$	(31.4	)	$	—	$	(31.4	)
Taiwan Dollar		(35.2	)		—		(35.2	)		(35.1	)		—		(35.1	)
Korean Won		(5.4	)		—		(5.4	)		(4.2	)		—		(4.2	)
British Pound Sterling		(1.1	)		—		(1.1	)		(1.8	)		—		(1.8	)
Danish Krone		(0.5	)		—		(0.5	)		—			—		—
Singapore Dollar		—			24.4		24.4			—			61.9		61.9
Euro		—			36.7		36.7			—			44.9		44.9
Philippine Peso		—			2.8		2.8			—			3.9		3.9
Chinese Yuan		—			2.4		2.4			—			2.8		2.8

Total	$	(79.7	)	$	66.3	$	(13.4	)	$	(72.5	)	$	113.5	$	41.0


	For the Three Months Ended				For the Nine Months Ended
	October 2, 2022		October 3, 2021		October 2, 2022		October 3, 2021
	(in thousands)				(in thousands)

Contractual interest expense on the coupon	$	159	$	355	$	592	$	2,666
Amortization of debt issuance fees recognized as interest expense (2)		43		2,424		173		9,771

Total interest expense on the convertible debt	$	202	$	2,779	$	765	$	12,437


	Foreign Currency Translation Adjustment			Unrealized Gains (Losses) on Marketable Securities			Unrealized Gains on Cash Flow Hedges		Retirement Plans Prior Service Credit			Total
	(in thousands)
Nine Months Ended October 2, 2022

Balance at December 31, 2021, net of tax of $0, $1,055, $0, $(1,128), respectively	$	(10,818	)	$	3,704		$	—	$	1,166		$	(5,948	)
Other comprehensive (loss) gain before reclassifications, net of tax of $0, $(3,570), $0, $0, respectively		(66,258	)		(13,491	)		537		—			(79,212	)
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $48, $0, $(2), respectively		—			386			—		(5	)		381

Net current period other comprehensive (loss) gain, net of tax of $0, $(3,522), $0, $(2), respectively		(66,258	)		(13,105	)		537		(5	)		(78,831	)

Balance at October 2, 2022, net of tax of $0, $(2,467), $0, $(1,130), respectively	$	(77,076	)	$	(9,401	)	$	537	$	1,161		$	(84,779	)

Nine Months Ended October 3, 2021
Balance at December 31, 2020, net of tax of $0, $1,910, $0, $(1,126), respectively	$	25,389		$	6,954		$	—	$	1,173		$	33,516
Other comprehensive loss before reclassifications, net of tax of $0, $(516), $0, $0, respectively		(26,672	)		(1,952	)		—		—			(28,624	)
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $(186), $0, $(2), respectively		—			(670	)		—		(5	)		(675	)

Net current period other comprehensive loss, net of tax of $0, $(702), $0, $(2), respectively		(26,672	)		(2,622	)		—		(5	)		(29,299	)

Balance at October 3, 2021, net of tax of $0, $1,208, $0, $(1,128), respectively	$	(1,283	)	$	4,332		$	—	$	1,168		$	4,217


	Gross Carrying Amount		Accumulated Amortization			Foreign Currency Translation Adjustment			Net Carrying Amount
	(in thousands)
Balance at October 2, 2022

Developed technology	$	272,547	$	(232,802	)	$	(7,620	)	$	32,125
Customer relationships		57,739		(50,623	)		126			7,242
Tradenames and trademarks		59,387		(40,809	)		(2,365	)		16,213

Total intangible assets	$	389,673	$	(324,234	)	$	(9,859	)	$	55,580

Balance, December 31, 2021
Developed technology	$	272,547	$	(223,413	)	$	(4,093	)	$	45,041
Customer relationships		57,739		(48,921	)		209			9,027
Tradenames and trademarks		59,387		(37,237	)		(583	)		21,567

Total intangible assets	$	389,673	$	(309,571	)	$	(4,467	)	$	75,635


	For the Nine Months Ended
	October 2, 2022						October 3, 2021
	United States			Foreign			United States			Foreign
	(in thousands)
Service cost	$	1,191		$	539		$	1,357		$	720
Interest cost		3,665			333			3,295			257
Expected return on plan assets		(2,195	)		(54	)		(2,809	)		(50	)
Net actuarial gain		(45	)		—			(400	)		—

Total net periodic pension cost	$	2,616		$	818		$	1,443		$	927


Hypothetical Change in Teradyne Stock Price	Fair Value		Estimated change in fair value			Hypothetical percentage increase (decrease) in fair value
10% Increase	$	170,003	$	15,517			10.0	%
No Change		154,486		—			—
10% Decrease		138,990		(15,496	)		(10.0	)


Hypothetical Change in Teradyne Stock Price	Fair Value		Estimated change in fair value			Hypothetical percentage increase (decrease) in fair value

10% Increase	$	127,385	$	11,607			10.0	%
No Change		115,778		—			—
10% Decrease		104,171		(11,607	)		(10.0	)


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
July 4, 2022 - July 31, 2022		1,296		$	93.00			1,296	$	746,702,775
August 1, 2022 – August 28, 2022		972		$	99.56			971	$	650,000,254
August 29, 2022 – October 2, 2022		1		$	82.86			—	$	650,000,254

		2,269	(1)	$	95.81	(1)		2,267


Period	Total Number of Shares (or Units) Purchased			Average Price Paid per Share (or Unit)			Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may Yet Be Purchased Under the Plans or Programs (2)

April 3, 2023 – April 30, 2023		410		$	100.73			409	$	1,865,063
May 1, 2023 – May 28, 2023		469		$	92.88			467	$	1,821,664
May 29, 2023 – July 2, 2023		474		$	108.31			473	$	1,770,455

		1,354	(1)	$	100.66	(1)		1,349


Exhibit Number	Description

~~3.1~~		~~Amended and Restated Bylaws of Teradyne, Inc. effective September 6, 2022 filed as Exhibit 3.1 to Teradyne’s Current Report on Form~~ ~~8-K~~ ~~filed on September 6, 2022.~~

~~10.1~~	Second 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 (filed herewith)

31.1	Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) of Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

31.2	Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) of Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

101.INS	Inline XBRL Instance Document

101.SCH	Inline XBRL Taxonomy Extension Schema Document

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as Inline XBRL, and contained in Exhibit 101)