Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of Income (Loss) Before Income Taxes and Provision (Benefit) for Income Taxes from Operations

The components of income before income taxes and the provision (benefit) for income taxes as shown in the consolidated statements of operations were as follows:

	2021			2020			2019
	(in thousands)
Income before income taxes:
U.S.	$	403,451		$	312,153		$	192,442
Non-U.S.		757,504			588,862			333,330
	$	1,160,955		$	901,015		$	525,772
Provision (benefit) for income taxes:
Current:
U.S. Federal	$	58,218		$	58,678		$	19,297
Non-U.S.		105,153			75,193			52,810
State		300			(1,315	)		(4,347	)
		163,671			132,556			67,760
Deferred:
U.S. Federal		(15,106	)		(12,604	)		(4,522	)
Non-U.S.		(4,300	)		(5,127	)		(8,007	)
State		2,101			2,043			3,073
		(17,305	)		(15,688	)		(9,456	)
Total provision for income taxes:	$	146,366		$	116,868		$	58,304

Reconciliation of Effective Tax Rate

A reconciliation of the effective tax rate for the years 2021, 2020 and 2019 is as follows:

	2021			2020			2019
U.S. statutory federal tax rate		21.0	%		21.0	%		21.0	%
U.S. global intangible low-taxed income		0.6			2.1			1.8
State income taxes, net of federal tax benefit		0.2			0.3			0.5
Foreign taxes		(4.5	)		(5.6	)		(4.0	)
U.S. foreign derived intangible income		(2.3	)		(2.2	)		(2.6	)
U.S. research and development credit		(1.4	)		(1.3	)		(1.8	)
Equity compensation		(0.9	)		(0.6	)		(0.7	)
Foreign tax credits		(0.5	)		(1.2	)		(1.6	)
Uncertain tax positions		(0.4	)		(0.1	)		(4.3	)
U.S. transition tax		—			—			1.9
Other, net		0.8			0.6			0.9
		12.6	%		13.0	%		11.1	%

Deferred Tax Assets (Liabilities)

Significant components of Teradyne’s deferred tax assets (liabilities) as of December 31, 2021 and 2020 were as follows:

	2021			2020
	(in thousands)
Deferred tax assets:
Tax credits	$	98,378		$	87,595
Accruals		41,459			33,156
Pension liabilities		28,722			28,348
Inventory valuations		20,991			18,427
Lease liability		16,484			12,627
Deferred revenue		11,164			9,235
Equity compensation		6,630			6,543
Vacation accrual		6,050			5,890
Investment impairment		3,292			3,292
Net operating loss carryforwards		1,721			1,823
Other		774			626
Gross deferred tax assets		235,665			207,562
Less: valuation allowance		(97,170	)		(84,962	)
Total deferred tax assets	$	138,495		$	122,600
Deferred tax liabilities:
Right of use assets	$	(14,738	)	$	(10,688	)
Depreciation		(10,691	)		(14,525	)
Intangible assets		(8,531	)		(12,726	)
Contingent consideration		(5,214	)		(3,515	)
Marketable securities		(3,220	)		(3,344	)
Other		—			(710	)
Total deferred tax liabilities	$	(42,394	)	$	(45,508	)
Net deferred assets	$	96,101		$	77,092

Operating Loss Carryforwards

At December 31, 2021, Teradyne had tax effected operating loss carryforwards that expire in the following years:

	State Operating Loss Carryforwards		Foreign Operating Loss Carryforwards
	(in thousands)
2022	$	144	$	53
2023		208		—
2024		51		—
2025		4		—
2026		—		—
2027-2031		361		173
2032-2036		58		13
Beyond 2036		22		—
Non-expiring		13		621
Total	$	861	$	860

Unrecognized Tax Benefits

Teradyne’s gross unrecognized tax benefits for the years ended December 31, 2021, 2020 and 2019 were as follows:

	2021			2020			2019
	(in thousands)
Beginning balance as of January 1	$	17,903		$	21,180		$	43,395
Additions:
Tax positions for current year		1,417			1,082			1,322
Tax positions for prior years		30			66			8,043
Reductions:
Tax positions for prior years		(1,639	)		(2,989	)		(31,397	)
Expiration of statutes		(3,246	)		(1,436	)		(183	)
Ending balance as of December 31	$	14,465		$	17,903		$	21,180