Financial Instruments

3 Months Ended

Mar. 30, 2025

Fair Value Disclosures [Abstract]

Financial Instruments

I. FINANCIAL INSTRUMENTS

Cash Equivalents

Teradyne considers all highly liquid investments with maturities of three months or less at the date of acquisition to be cash equivalents.

Marketable Securities

Teradyne’s equity and debt mutual funds are classified as Level 1 and available-for-sale debt securities are classified as Level 2. The vast majority of Level 2 securities are fixed income securities priced by third party pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available, use other observable inputs like market transactions involving identical or comparable securities.

During the three months ended March 30, 2025 and March 31, 2024, there were no transfers in or out of Level 1, Level 2, or Level 3 financial instruments.

Realized gains recorded in the three months ended March 30, 2025 and March 31, 2024, were $0.7 million and $1.0 million, respectively. Realized losses recorded in the three months ended March 30, 2025 and March 31, 2024, were $1.2 million and $0.2 million, respectively. Realized gains and losses are included in other (income) expense, net.

Unrealized gains on equity securities recorded in the three months ended March 30, 2025 and March 31, 2024, were $0.2 million and $2.6 million, respectively. Unrealized losses on equity securities recorded in the three months ended March 30, 2025, were $3.1 million. Unrealized gains and losses on equity securities are included in other (income) expense, net.

Unrealized gains and losses on available-for-sale debt securities are included in accumulated other comprehensive income (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 March 30, 2025 and December 31, 2024.

	March 30, 2025
	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	$	213,718	$	—	$	—	$	213,718
Cash equivalents		260,940		974		—		261,914
Available-for-sale securities:
U.S. Treasury securities		—		41,950		—		41,950
Corporate debt securities		—		35,933		—		35,933
Debt mutual funds		8,890		—		—		8,890
U.S. government agency securities		—		4,151		—		4,151
Certificates of deposit and time deposits		—		1,484		—		1,484
Non-U.S. government securities		—		782		—		782
Equity securities:
Mutual funds		52,709		—		—		52,709
	$	536,257	$	85,274	$	—	$	621,531
Derivative assets		—		1,216		—		1,216
Total	$	536,257	$	86,490	$	—	$	622,747
Liabilities
Derivative liabilities		—		1,052		—	$	1,052
Total	$	—	$	1,052	$	—	$	1,052
Reported as follows:
	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	474,658	$	974	$	—	$	475,632
Marketable securities		—		32,145		—		32,145
Long-term marketable securities		61,599		52,155		—		113,754
Prepayments		—		1,216		—		1,216
Total	$	536,257	$	86,490	$	—	$	622,747
Liabilities
Other current liabilities	$	—	$	1,052	$	—	$	1,052
Total	$	—	$	1,052	$	—	$	1,052

	December 31, 2024
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in thousands)
Assets
Cash	$	261,176	$	—	$	—	$	261,176
Cash equivalents		283,037		9,141		—		292,178
Available-for-sale securities:
U.S. Treasury securities		—		44,942		—		44,942
Corporate debt securities		—		35,696		—		35,696
Certificates of deposit and time deposits		—		21,689		—		21,689
Debt mutual funds		8,951		—		—		8,951
U.S. government agency securities		—		3,970		—		3,970
Non-U.S. government securities		—		773		—		773
Equity securities:
Mutual Funds		54,412		—		—		54,412
	$	607,576	$	116,211	$	—	$	723,787
Derivative assets		—		1,665		—		1,665
Total	$	607,576	$	117,876	$	—	$	725,452
Liabilities
Derivative liabilities		—		1,324		—		1,324
Total	$	—	$	1,324	$	—	$	1,324
Reported as follows:
	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	544,213	$	9,141	$	—	$	553,354
Marketable securities		—		46,312		—		46,312
Long-term marketable securities		63,363		60,758		—		124,121
Prepayments		—		1,665		—		1,665
Total	$	607,576	$	117,876	$	—	$	725,452
Liabilities
Other current liabilities	$	—	$	1,324	$	—	$	1,324
Total	$	—	$	1,324	$	—	$	1,324

The carrying amounts and fair values of Teradyne’s financial instruments at March 30, 2025 and December 31, 2024, were as follows:

	March 30, 2025				December 31, 2024
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Assets
Cash and cash equivalents	$	475,632	$	475,632	$	553,354	$	553,354
Marketable securities		145,899		145,899		170,433		170,433
Derivative assets		1,216		1,216		1,665		1,665
Liabilities
Derivative liabilities		1,052		1,052		1,324		1,324

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 March 30, 2025:

	March 30, 2025
	Available-for-Sale
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
U.S. Treasury securities	$	46,506	$	32	$	(4,588	)	$	41,950	$	29,698
Corporate debt securities		40,249		138		(4,454	)		35,933		26,551
Debt mutual funds		9,152		—		(262	)		8,890		3,138
U.S. government agency securities		4,149		2		—			4,151		2,147
Certificates of deposit and time deposits		1,484		—		—			1,484		—
Non-U.S. government securities		782		—		—			782		—
	$	102,322	$	172	$	(9,304	)	$	93,190	$	61,534

Reported as follows:

	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	32,213	$	15	$	(83	)	$	32,145	$	18,090
Long-term marketable securities		70,109		157		(9,221	)		61,045		43,444
	$	102,322	$	172	$	(9,304	)	$	93,190	$	61,534

The following table summarizes the composition of available-for-sale marketable securities at December 31, 2024:

	December 31, 2024
	Available-for-Sale
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
U.S. Treasury securities	$	49,879	$	14	$	(4,951	)	$	44,942	$	30,530
Corporate debt securities		40,395		79		(4,778	)		35,696		27,824
Certificates of deposit and time deposits		21,689		—		—			21,689		—
Debt mutual funds		9,299		—		(348	)		8,951		3,238
U.S. government agency securities		3,966		5		(1	)		3,970		1,946
Commercial paper		—		—		—			—		—
Non-U.S. government securities		773		—		—			773		—
	$	126,001	$	98	$	(10,078	)	$	116,021	$	63,538

Reported as follows:

	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	46,349	$	16	$	(53	)		46,312	$	10,454
Long-term marketable securities		79,652		82		(10,025	)		69,709		53,084
	$	126,001	$	98	$	(10,078	)	$	116,021	$	63,538

As of March 30, 2025, the fair market value of investments with unrealized losses less than one year and greater than one year totaled $20.6 million and $40.9 million, respectively. As of December 31, 2024, the fair market value of investments with unrealized losses for less than one year and greater than one year totaled $22.6 million and $40.9 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 March 30, 2025 and December 31, 2024, are considered temporary and are expected to recover over time as market conditions improve.

The contractual maturities of investments in available-for-sale securities held at March 30, 2025, were as follows:

	March 30, 2025
	Cost		Fair Market Value
	(in thousands)
Due within one year	$	32,213	$	32,145
Due after 1 year through 5 years		16,469		16,395
Due after 5 years through 10 years		9,054		8,795
Due after 10 years		35,434		26,965
Total	$	93,170	$	84,300

Contractual maturities of investments in available-for-sale securities held at March 30, 2025, exclude debt mutual funds with a fair market value of $8.9 million as they do not have a contractual maturity date.

Derivatives

Teradyne conducts business in various foreign countries, with certain transactions denominated in local currencies. As a result, Teradyne is exposed to risks relating to changes in foreign currency exchange rates. Teradyne’s foreign currency risk management objective is to minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities denominated in foreign currencies, and changes in its cash inflows attributable to the forecasted cash flows from certain foreign currency denominated revenues.

To minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities denominated in foreign currencies, Teradyne enters into foreign currency forward contracts. The change in fair value of these derivatives is recorded directly in earnings and is used to offset the change in value of monetary assets and liabilities denominated in foreign currencies.

Teradyne also enters into foreign currency forward and option contracts designated as cash flow hedges to hedge the risk of changes in its cash inflows attributable to changes in foreign currency exchange rates. The cash flow hedges have maturities of less than six months and mature in the period of revenue recognition for certain products and services in backlog and forecasted to be recognized in a future period. Teradyne evaluates cash flow hedges for effectiveness at inception based on the critical terms match method. The hedges are not expected to incur any ineffectiveness however a quarterly qualitative assessment of effectiveness is done to determine if the critical terms match method remains appropriate to use. The change in fair value of the contracts is recorded in accumulated other comprehensive income (loss) and reclassified to earnings at maturity date.

Teradyne does not use derivative financial instruments for speculative purposes.

At March 30, 2025 and December 31, 2024, Teradyne had the following contracts to buy and sell non-U.S. currencies for U.S. dollars and other non-U.S. currencies with the following notional amounts:

	Net Notional Value
	March 30, 2025		December 31, 2024
	(in millions)
Currency Hedged (Buy/Sell)
U.S. dollar/Japanese yen	$	19.8	$	12.6
U.S. dollar/Taiwan dollar		15.7		14.5
U.S. dollar/Korean won		9.3		4.2
Danish krone/Chinese yuan		4.2		10.5
U.S. dollar/Danish krone		4.0		—
U.S. dollar/British pound sterling		1.3		1.2
Singapore dollar/U.S. dollar		46.0		28.9
Euro/U.S. dollar		23.8		22.3
Philippine peso/U.S. dollar		1.8		9.4
Chinese yuan/U.S. dollar		1.3		1.6
Danish krone/U.S. dollar		0.7		16.9
Total	$	127.9	$	122.1

The fair value of the outstanding contracts resulted in a net gain of $0.2 million and a net loss of $0.6 million at March 30, 2025 and December 31, 2024, respectively.

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 March 30, 2025 and December 31, 2024, Teradyne had the following cash flow hedge contracts to buy and sell non-U.S. currencies for U.S. dollars with the following notional amounts:

	Net Notional Value
	March 30, 2025		December 31, 2024
	(in millions)
Currency Hedged (Buy/Sell)
U.S. dollar/Japanese yen	$	6.1	$	15.6
Total	$	6.1	$	15.6

The change in fair value of the outstanding cash flow hedge contracts was a loss of $0.1 million and a gain of $0.9 million at March 30, 2025 and December 31, 2024, 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.

On January 13, 2025, Teradyne entered into a forward to buy 23.7 million Euros which expired on February 3, 2025. For the three months ended March 30, 2025, a realized gain of $0.6 million was recorded in Other (income) expense, net, in the consolidated statement of operations.

The following table summarizes the fair value of derivative instruments as of March 30, 2025 and December 31, 2024:

	Balance Sheet Location	March 30, 2025			December 31, 2024
		(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Other current assets	$	1,216		$	725
Foreign exchange forward contracts	Other current liabilities		(984	)		(1,324	)
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	Other current assets		—			940
Foreign exchange forward contracts	Other current liabilities		(68	)		—
Total derivatives		$	164		$	341

The following table summarizes the effect of derivative instruments recognized in the statement of operations for the three months ended March 30, 2025 and March 31, 2024:

		For the Three Months  Ended
	Location of (Gains) Losses Recognized in Statement of Operations	March 30, 2025			March 31, 2024
		(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts (1)	Other (income) expense, net	$	(166	)	$	(1,699	)
Foreign exchange option contracts	Other (income) expense, net		—			13,918
Derivatives designated as hedging instruments:
Foreign exchange forward and option contracts	Revenue		(747	)		(2,280	)
Total Derivatives		$	(913	)	$	9,939

(1)The table does not reflect the corresponding gains and losses from the remeasurement of the monetary assets and liabilities denominated in foreign currencies. For the three months ended March 30, 2025 and March 31, 2024, net losses from remeasurement of monetary assets and liabilities denominated in foreign currencies were $2.2 million and $2.7 million, respectively.

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