10-K – 2026-02-19 – ter-20251231.htm

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 sizable demand for our offerings both through direct sales and sales to the customer’s supply partners. We expect that sales of our test products will continue to be concentrated with a limited number of major customers for the foreseeable future.
In 2025, our Semiconductor Test segment achieved considerable growth driven by robust demand from Artificial Intelligence (“AI”) applications in networking and with vertically integrated producer (“VIP”) compute solutions. Memory test revenue remained stable despite a smaller overall market, supported by share gains in high bandwidth memory (“HBM”) and DRAM final test applications. The Semiconductor Test segment’s strategic shift toward AI-driven semiconductor testing resulted in AI related customer demand driving the majority of our revenue in the second half of 2025. Looking ahead to 2026, we expect AI related customer demand to continue to represent the bulk of our revenues in the first quarter. Our results reflect our focused investments in AI applications and VIP customers, with benefits from these initiatives materializing throughout 2025 and expected to continue in 2026. In the Product Test Group, we also achieved revenue growth in 2025, bolstered primarily by strength in defense and aerospace applications.
In our Robotics segment, the fourth quarter of 2025 represented the third consecutive quarter of sequential revenue growth. During the year, we aimed at strategic partnerships with original equipment manufacturers, systems integrators, and large enterprise accounts, concentrating on high-growth verticals such as ecommerce, logistics, semiconductor, and electronics. At the same time, we also reduced costs through restructuring activities designed to better position the Robotics organization for future success.
On January 29, 2026, we and MultiLane, a leading high-speed input/output (“I/O”) test and measurement company, announced an agreement to form a joint venture, MultiLane Test Products (“MLTP”). MLTP is being created to serve the growing demand from the AI Data Center equipment market by accelerating the development of test solutions for critical high speed data connections. Under the agreement, MultiLane will contribute all the assets related to its test and measurement business to the joint venture and we will invest approximately $157 million in exchange for 75% ownership of MLTP. This transaction is expected to close in the first half of 2026 and is subject to customary closing conditions.
On May 31, 2025, we acquired privately held Quantifi Photonics (“Quantifi”), a leader in PIC test solutions for a total purchase price of $127.2 million. This acquisition enables the delivery of scalable PIC test solutions and is included in our Product Test segment. Over time, we also intend to leverage the engineering expertise and technology to enhance functionality and create additional differentiation in our Semiconductor Test business, specifically with integration into our UltraFlexplus platform.
On January 31, 2025, we acquired Infineon Technologies AG's (“Infineon”) automated test equipment technology and associated development team (“AET”) based in Regensburg, Germany for a total purchase price of 17.6 million Euros, equivalent to $18.3 million. AET adds resources and expertise to our company and strengthens the relationship between us and this key customer. AET is included in our Semiconductor Test segment.
While revenues in our test businesses are predominantly in U.S. dollars, the majority of our Robotics revenue is denominated in foreign currencies. Strengthening of the U.S. dollar has, and will continue to, negatively affect Robotics revenue in 2025 and 2026, respectively.

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Our capital allocation plan will continue to be focused on investing in organic and inorganic growth and returning cash to shareholders through share repurchases and dividends. During 2025, we completed the acquisitions of Quantifi and AET and additionally, we returned $778.4 million to shareholders through $702.1 million of share buybacks and $76.3 million of dividend payments.
Government Regulations
We are subject to numerous U.S. and foreign laws and regulations, including, without limitation, tariffs, trade sanctions, trade barriers, trade embargoes, regulations relating to import-export control, technology transfer restrictions, and other laws and regulations. Additionally, U.S. and foreign governmental authorities have taken, and may continue to take, administrative, legislative or regulatory action that could impact our operations. We believe that our operations are in material compliance with applicable trade regulations. The costs we incurred in complying with applicable trade regulations for the year ended December 31, 2025 were not material, however, compliance with these laws has limited our ability to compete in certain regions. It is possible that future developments, including changes in laws and regulations or government policies, could lead to material costs, and such costs may have an material adverse effect on our future business or prospects.
For information regarding risks associated with import-export control regulations and similar applicable laws and regulations, see Part II - Item 1A “Risk Factors- Risks Related to Legal and Regulatory Compliance” included elsewhere in this Form 10-K.
Critical Accounting Estimates
We have identified the policies and estimates discussed below as critical to understanding our business and our results of operations and financial condition. The impact and any associated risks related to these estimates on our business operations is discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations where such policies affect our reported and expected financial results. For a full description of our accounting policies related to the below items refer to Note B: “Accounting Policies”, included in the Notes to Consolidated Financial Statements in this Annual Report.
Critical accounting estimates are complex and may require significant judgment by management. Changes to the underlying assumptions may have a material impact on our financial condition and results of operations. These estimates may change, as new events occur, and additional information is obtained. Actual results could differ significantly from these estimates under different assumptions or conditions.
Revenue Recognition
In accordance with ASC 606, “ Revenue from Contracts with Customers” (“ASC 606”) , we recognize revenues, when or as control is transferred to a customer. Our determination of revenue requires judgment in the determination of performance obligations and allocation of the transaction price to performance obligations. We often sell bundled orders that include both product and services or multiple different products within the same order. We evaluate each of the deliverables to determine if it meets the definition of a performance obligation, which requires that it is capable of being distinct and distinct within the context of the contract. This determination is based on an assessment of contractual rights of the contract and the ability of the performance obligation to perform on its own or with readily available resources. In bundled transactions, we estimate the standalone selling price of each identified performance obligation and use that estimate to allocate the transaction price among said performance obligations. The estimated standalone selling price is determined using all information reasonably available to us, including standalone transactions, market information and other observable inputs.
Inventories
Inventories are stated at the lower of cost using a standard costing system which approximates cost based on a first-in, first-out basis or net realizable value. On a quarterly basis, we evaluate all inventories for net realizable value. This quarterly process identifies obsolete and excess inventory. Obsolete inventory, which represents items for which there is no demand, is fully reserved. Excess inventory, which represents inventory items that are not expected to be consumed within the forecasted demand window, is written down to estimated net realizable value. Forecasted demand information is obtained from the sales and marketing groups and incorporates factors such as backlog and future revenues. The demand forecast is based on assumptions around the product life and customer and market expectations.
Retirement and Postretirement Plans
We recognize net actuarial gains and losses and the change in the fair value of the plan assets in our operating results in the year in which they occur or upon any interim remeasurement of the plans. Discount rate and expected return on assets are two assumptions

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which are important elements of pension plan expense and asset/liability measurement. We evaluate our discount rate and expected rate of return on assets assumptions annually on a plan and country specific basis. We evaluate other assumptions related to demographic factors, such as retirement age, mortality and turnover periodically, and update them to reflect our experience and expectations for the future.
In developing the expected return on U.S. Qualified Pension Plan (“U.S. Plan”) assets assumption, we evaluated input from our investment manager and pension consultants, including their forecast of asset class return expectations. We believe that 5.05% was an appropriate rate of return on assets to use for 2025. The December 31, 2025, asset allocation for our U.S. Plan was 94% invested in fixed income securities, 5% invested in equity securities, and 1% invested in other securities. Our investment manager regularly reviews the actual asset allocation and periodically rebalances the portfolio to ensure alignment with our target allocations.
The discount rate that we utilized for determining future pension obligations for the U.S. Plan is based on the FTSE Pension Index adjusted for the U.S. Plan’s expected cash flows and was 5.30% at December 31, 2025, down from 5.45% at December 31, 2024. We estimate that in 2026 we will recognize approximately $0.1 million of pension income for the U.S. Plan. The U.S. Plan pension income estimate for 2026 is based on a 5.30% discount rate and a 5.10% return on assets. Future pension expense or income will depend on future investment performance, changes in future discount rates and various other factors related to the employee population participating in our pension plans.
Goodwill, Intangible and Long-Lived Assets
Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired. Goodwill is assessed for impairment at the reporting unit level annually during the fourth quarter of each fiscal year, as of December 31, or more frequently if we believe indicators of impairment exist. Potential impairment is identified by comparing the fair value of a reporting unit to its carrying value, including goodwill. For our annual impairment assessment, we have the option to evaluate qualitative factors such as industry and market conditions, and entity specific financial performance and events, including changes in management, strategy and key customers. If based on our qualitative assessment it is more likely than not that the fair value of the reporting unit is less than its carry amount, we are required to perform quantitative impairment testing. If necessary, an impairment loss is recognized in an amount equal to the excess of the reporting unit’s carrying value over its fair value, up to the amount of goodwill allocated to the reporting unit.
Intangible assets acquired through a business combination typically consist of developed technologies, customer relationships, and trademarks and trade names. Long-lived assets primarily consist of property and equipment and operating lease right-of-use assets. We engage third-party valuation specialists to assist us with the initial measurement of the fair value of acquired intangible assets. We evaluate the recoverability of intangible assets and long-lived assets whenever events and changes in circumstances, such as reductions in demand or significant economic slowdowns, indicate that the carrying amount of an asset may not be fully recoverable. When indicators of impairment are present, the future undiscounted cash flows of the related asset group are compared to its carrying value. If necessary, the net book value of the underlying asset is adjusted to fair value as indicated by the sum of the expected discounted cash flows. Fair values are based on estimates of market prices and assumptions concerning the amount and timing of estimated future cash flows.
The impairment assessment of goodwill, intangible assets and long-lived assets involves critical estimates and assumptions, which may be unpredictable and inherently uncertain. These estimates and assumptions may include projected revenue growth rates, projected earnings before interest, taxes, depreciation, and amortization margins, discount rate, and comparable market multiples, specifically revenue multiples. Any changes in key assumptions could impact the result of the impairment assessment.
Income Taxes
Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The measurement of deferred tax assets is reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized. Evaluating the positive and negative evidence regarding the realization of the net deferred tax assets in accordance with ASC 740, “ Accounting for Income Taxes ” is a key judgment in the valuation of income taxes. This assessment included the evaluation of scheduled reversals of deferred tax liabilities, estimates of projected future taxable income and tax-planning strategies. Although realization is not assured, based on our assessment, we concluded that it is more likely than not that such assets, net of the existing valuation allowance, will be realized.

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Business Combinations
We recognize tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The fair value of identifiable intangible assets is based on detailed cash flow valuations that use information and assumptions provided by management, for example, revenue growth rates, customer attrition rates, and discount rate. We allocate any excess purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed to goodwill. The assumptions used in the valuations for our acquisitions may differ materially from actual results depending on performance of the acquired businesses and other factors. While we believe the assumptions used were appropriate, different assumptions in the valuation of assets acquired and liabilities assumed could have a material impact on the timing and extent of impact on our statements of operations. Goodwill is assigned to reporting units as of the date of the related acquisition.
Results of Operations
Information pertaining to fiscal year 2023 results of operations, including a year-to-year comparison against fiscal year 2024, was included in our Annual Report on Form 10-K for the year ended December 31, 2024 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations,” which was filed with the SEC on February 20, 2025. This information is incorporated by reference herein.
The following table sets forth the percentage of total net revenues included in our consolidated statements of operations:
 

 

 

Years Ended December 31,

 

 

 

2025

 

 

2024

 

Percentage of revenues:

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

Products

 

 

83.4

%

 

 

81.4

%

Services

 

 

16.6

 

 

 

18.6

 

Total revenues

 

 

100.0

 

 

 

100.0

 

Cost of revenues:

 

 

 

 

 

 

Cost of products

 

 

35.6

 

 

 

34.1

 

Cost of services

 

 

6.2

 

 

 

7.4

 

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

 

 

41.8

 

 

 

41.5

 

Gross profit

 

 

58.2

 

 

 

58.5

 

Operating expenses:

 

 

 

 

 

 

Selling and administrative

 

 

20.3

 

 

 

21.9

 

Engineering and development

 

 

15.8

 

 

 

16.3

 

Acquired intangible assets amortization

 

 

0.5

 

 

 

0.7

 

Restructuring and other

 

 

1.2

 

 

 

0.6

 

Gain on sale of business

 

 

—

 

 

 

(2.0

)

Total operating expenses

 

 

37.8

 

 

 

37.4

 

Income from operations

 

 

20.4

 

 

 

21.1

 

Non-operating (income) expenses:

 

 

 

 

 

 

Interest income

 

 

(0.5

)

 

 

(0.9

)

Interest expense

 

 

0.2

 

 

 

0.1

 

Other (income) expense, net

 

 

0.2

 

 

 

0.2

 

Income before income taxes and equity in net earnings of affiliate

 

 

20.5

 

 

 

21.6

 

Income tax provision

 

 

2.5

 

 

 

2.1

 

Income before equity in net earnings of affiliate

 

 

18.0

 

 

 

19.5

 

Equity in net earnings of affiliate

 

 

(0.6

)

 

 

(0.3

)

Net income

 

 

17.4

%

 

 

19.2

%

 

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Revenues
Revenues for our reportable segments were as follows:
 

 

 

2025

 

 

2024

 

 

Dollar
Change

 

 

 

(in millions)

 

Semiconductor Test

 

$

2,523.7

 

 

$

2,123.9

 

 

$

399.8

 

Product Test

 

 

358.0

 

 

 

331.1

 

 

 

26.9

 

Robotics

 

 

308.3

 

 

 

364.8

 

 

 

(56.5

)

 

 

$

3,190.0

 

 

$

2,819.9

 

 

$

370.1

 

 
The increase in Semiconductor Test revenues of $399.8 million, or 18.8%, was driven primarily by higher sales in compute related to artificial intelligence applications and in Integrated System Test primarily related to system level testers. The decrease in Robotics revenues of $56.5 million, or 15.5%, was primarily due to lower sales of collaborative robotic arms and autonomous mobile robots. The increase in Product Test revenues of $26.9 million, or 8.1%, was primarily due to higher sales of defense and aerospace testing systems.
 
Our reportable segments accounted for the following percentages of consolidated revenues:
 

 

 

2025

 

 

2024

 

Semiconductor Test

 

 

79

%

 

 

75

%

Product Test

 

 

11

 

 

 

12

 

Robotics

 

 

10

 

 

 

13

 

 

 

 

100

%

 

 

100

%

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

 

 

2025

 

 

2024

 

Taiwan

 

 

36

%

 

 

21

%

China

 

 

14

 

 

 

13

 

Korea

 

 

14

 

 

 

25

 

United States

 

 

11

 

 

 

13

 

Europe

 

 

7

 

 

 

9

 

Malaysia

 

 

3

 

 

 

2

 

Singapore

 

 

3

 

 

 

3

 

Philippines

 

 

3

 

 

 

2

 

Thailand

 

 

2

 

 

 

2

 

Japan

 

 

2

 

 

 

6

 

Rest of the World

 

 

4

 

 

 

4

 

 

 

 

100

%

 

 

100

%

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

The breakout of product and service revenues was as follows:
 

 

 

2025

 

 

2024

 

 

Dollar
Change

 

 

 

(in millions)

 

Product revenues

 

$

2,660.2

 

 

$

2,294.9

 

 

$

365.3

 

Service revenues

 

 

529.8

 

 

 

524.9

 

 

 

4.9

 

 

$

3,190.0

 

 

$

2,819.9

 

 

$

370.2

 

 
Our product revenues increased $365.3 million, or 15.9%, driven primarily by higher sales in compute related to artificial intelligence applications and in Integrated System Test primarily related to system level testers.

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In 2025 and 2024, our five largest direct customers in aggregate accounted for 44% and 36% of our consolidated revenues, respectively. See Note V: “Segment, Geographic, and Significant Customer Information” for additional discussion of significant customer concentrations.
Gross Profit
 

 

 

2025

 

 

2024

 

 

2024-2025
Dollar /
Point
Change

 

 

 

(in millions)

 

Gross profit

 

$

1,857.3

 

 

$

1,648.9

 

 

$

208.4

 

Percent of total revenues

 

 

58.2

%

 

 

58.5

%

 

 

(0.3

)

 
Gross profit as a percent of total revenues decreased by 0.3 points, primarily due to product mix.
 
The breakout of product and service gross profit was as follows:
 

 

 

2025

 

 

2024

 

 

2024-2025
Dollar /
Point
Change

 

 

 

(in millions)

 

Product gross profit

 

$

1,524.2

 

 

$

1,334.0

 

 

$

190.2

 

Percent of product revenues

 

 

57.3

%

 

 

58.1

%

 

 

(0.8

)

Service gross profit

 

$

333.2

 

 

$

314.9

 

 

$

18.3

 

Percent of service revenues

 

 

62.9

%

 

 

60.0

%

 

 

2.9

 

 
Product revenues gross profit percentage decreased by 0.8 points primarily due to product mix. Service revenues gross profit percentage increased by 2.9 points primarily in Semiconductor Test as a result of the sale of the DIS business on May 27, 2024.
During the year ended December 31, 2025, we recorded an inventory provision of $25.8 million included in cost of revenues, primarily due to downward revisions to previously forecasted demand levels for certain products. Of the $25.8 million of total excess and obsolete provisions, $17.5 million was related to Semiconductor Test, $6.0 million was related to Robotics, and $2.2 million was related to Product Test.
During the year ended December 31, 2024, we recorded an inventory provision of $18.9 million included in cost of revenues, primarily due to downward revisions to previously forecasted demand levels for certain products. Of the $18.9 million of total excess and obsolete provisions, $13.6 million was related to Semiconductor Test, $2.3 million was related to Robotics, and $3.1 million was related to Product Test.
During the years ended December 31, 2025, and 2024, we scrapped $11.8 million and $10.6 million of inventory, respectively, and sold $3.6 million and $2.2 million of previously written-down or written-off inventory, respectively. As of December 31, 2025, we had inventory related reserves for amounts which had been written-down or written-off totaling $151.8 million. We have no pre-determined timeline to scrap the remaining inventory.
Selling and Administrative
Selling and administrative expenses were as follows:
 

 

 

2025

 

 

2024

 

 

2024-2025
Change

 

 

 

(in millions)

 

Selling and administrative

 

$

648.9

 

 

$

617.0

 

 

$

31.8

 

Percent of total revenues

 

 

20.3

%

 

 

21.9

%

 

 

 

 
The increase of $31.8 million in selling and administrative expenses was primarily due to higher spending in Semiconductor Test partially offset by lower spending in Robotics.

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Engineering and Development
Engineering and development expenses were as follows:
 

 

 

2025

 

 

2024

 

 

2024-2025
Change

 

 

 

(in millions)

 

Engineering and development

 

$

504.6

 

 

$

460.9

 

 

$

43.7

 

Percent of total revenues

 

 

15.8

%

 

 

16.3

%

 

 

 

 
The increase of $43.7 million in engineering and development expenses was primarily due to higher spending in Semiconductor Test partially offset by lower spending in Robotics.
Restructuring and Other
During the year ended December 31, 2025, we recorded $29.4 million of severance charges, $24.3 million of which is related to the Robotics restructuring which impacted approximately 400 employees, $1.8 million of which was related to Product Test and $1.6 million of which was related to Semiconductor Test. During the year ended December 31, 2025, we made $15.3 million of Robotics severance payments. We expect all Robotics severance payments to be made prior to the end of the third quarter of 2026. Additionally, we recorded $4.9 million of asset impairment expenses and $2.3 million of acquisition and divestiture expenses.
During the year ended December 31, 2024, we recorded $5.2 million of severance charges related to headcount reductions of 98 people primarily in Robotics and Semiconductor Test, which included charges related to a voluntary early retirement program for employees meeting certain conditions, $3.6 million of acquisition and divestiture expenses, and $1.3 million of charges related to lease terminations.
Interest and Other
 

 

 

2025

 

 

2024

 

 

Dollar Change

 

 

 

(in millions)

 

Interest income

 

$

(15.7

)

 

$

(24.8

)

 

$

9.1

 

Interest expense

 

 

6.8

 

 

 

3.6

 

 

 

3.2

 

Other (income) expense, net

 

 

5.6

 

 

 

5.9

 

 

 

(0.3

)

 
Interest income decreased by $9.1 million primarily due to lower interest rates and a reduced cash balance compared to 2024. Interest expense increased by $3.2 million primarily due to borrowing from the credit facility during 2025.
Income Before Income Taxes and Equity in Net Earnings of Affiliate
 

 

 

2025

 

 

2024

 

 

2024-2025
Change

 

 

 

(in millions)

 

Semiconductor Test

 

$

700.7

 

 

$

558.2

 

 

$

142.5

 

Product Test

 

 

60.7

 

 

 

65.7

 

 

 

(5.0

)

Robotics

 

 

(99.4

)

 

 

(77.6

)

 

 

(21.8

)

Corporate and Eliminations (1)

 

 

(8.8

)

 

 

62.7

 

 

 

(71.5

)

 

 

$

653.3

 

 

$

609.1

 

 

$

44.2

 

 
(1) Included in Corporate and Eliminations are gain on sale of business, interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, severance charges, pension and postretirement plan actuarial gains (losses), acquisition and divestiture related expenses, legal and environmental fees, contract termination settlement charge, and modification of outstanding equity awards.

The increase in income before income taxes and equity in net earnings of affiliate in Semiconductor Test was driven primarily by higher sales in compute related to artificial intelligence applications and in Integrated System Test primarily related to system level testers, partially offset by higher spending in selling and administrative and engineering and development. The decrease in income before income taxes and equity in net earnings of affiliate in Robotics was primarily due to lower sales of collaborative robotic arms, partially offset by lower operating expenses. The change in income before income taxes and equity in net earnings of affiliate in Corporate and Eliminations was primarily due to the sale of the DIS business on May 27, 2024.

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Income Taxes
Income tax expense for 2025 and 2024 totaled $79.3 million and $59.5 million, respectively. The effective tax rate for 2025 and 2024 was 12.1% and 9.8%, respectively. The increase in the effective tax rate from the year ended December 31, 2024, to the year ended December 31, 2025, is primarily attributable to decreases in benefits related to reserves for uncertain tax positions, foreign tax credits and U.S. research and development tax credits. This increase was partially offset by a shift in the geographic distribution of income which resulted in a reduction of income in higher tax rate jurisdictions.
We qualify for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board under which certain headcount and spending requirements must be met. The tax savings attributable to the Singapore tax holiday for the years ended December 31, 2025, and 2024 were $21.6 million or $0.14 per diluted share and $17.1 million or $0.10 per diluted share, respectively. In December 2025, we entered into an agreement with the Singapore Economic Development Board which extended our Singapore tax holiday under substantially similar terms to the agreement which expired on December 31, 2025. The new tax holiday is scheduled to expire on December 31, 2035.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA, P.L. 119-21) was enacted, introducing significant changes to U.S. federal income tax law. Key provisions include the permanent extension of 100% bonus depreciation, immediate expensing of research and experimental expenditures, and modifications to the deduction for business interest expense. The OBBBA also reduces the deduction rates for taxation of foreign income and taxation of income from export sales. The OBBBA did not have a material impact on the consolidated financial statements for the year ended December 31, 2025.
On January 5, 2026, the Organisation for Economic Co-operation and Development (OECD/G20) Inclusive Framework released a 'side-by-side' arrangement that provides a safe harbor for U.S.-headquartered multinationals, effectively recognizing the U.S. tax system as complying with the Pillar Two GloBE rules for fiscal years beginning on or after January 1, 2026. Under this agreement, we expect our U.S. parented group and our foreign subsidiaries to be exempt from the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR) in foreign jurisdictions that adopt this safe harbor. While we do not anticipate material top-up taxes under the IIR and UTPR due to this agreement, we continue to monitor the implementation of Qualified Domestic Minimum Top-up Taxes (QDMTTs) in foreign jurisdictions, which remain unaffected by the side-by-side agreement.
Capital Resources and Material Cash Requirement
Sources of Liquidity
 

 

 

2025

 

 

2024

 

 

2024-2025
Change

 

.

 

(in millions)

 

Cash, cash equivalents and marketable securities:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

293.8

 

 

 

553.4

 

 

 

(259.6

)

Short-term marketable securities

 

 

28.2

 

 

 

46.3

 

 

 

(18.1

)

Long-term marketable securities

 

 

126.3

 

 

 

124.1

 

 

 

2.1

 

Total cash, cash equivalents and marketable securities:

 

$

448.3

 

 

$

723.8

 

 

$

(275.5

)

 

 

 

 

 

 

 

 

 

 

Short-term debt

 

$

200.0

 

 

$

—

 

 

$

200.0

 

 
Our cash, cash equivalents and marketable securities balance decreased by $275.5 million in 2025 to $448.3 million. Cash decreased primarily due to stock repurchases in the amount of $702.1 million and acquisitions of businesses in the amount of $144.4 million, partially offset by operating cash proceeds.
Our Third Amended and Restated Revolving Credit Agreement, amended as of November 7, 2023 (the “Credit Agreement”) provides a six-year, senior secured revolving credit facility of $750.0 million (the “Credit Facility”). During 2025, we borrowed a combined $250.0 million under the Credit Agreement to fund our capital allocation strategy, of which $200.0 million was outstanding as of year-end. The Credit Agreement is set to expire on December 10, 2026. See Note L: “Debt” for more information regarding our Credit Agreement. As of February 19, 2026, we were in compliance with all covenants under the Credit Agreement.
 
 

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Cash Flows
 

 

 

December 31, 2025

 

 

December 31, 2024

 

 

2024-2025
Change

 

 

 

(in millions)

 

Net cash (used for) provided by:

 

 

 

 

 

 

 

 

 

Operating activities

 

 

674,415

 

 

 

672,176

 

 

 

2,239

 

Investing activities

 

 

(368,617

)

 

 

(622,342

)

 

 

253,725

 

Financing activities

 

 

(562,250

)

 

 

(251,767

)

 

 

(310,483

)

Effects of exchange rate changes on cash and cash equivalents

 

 

(3,151

)

 

 

(2,284

)

 

 

(867

)

Net increase (decrease) in cash and cash equivalents

 

$

(259,603

)

 

$

(204,217

)

 

$

(55,386

)

 

 

 

 

 

 

 

 

 

 

Net change in operating assets and liabilities, net of businesses acquired

 

 

(72,509

)

 

 

23,876

 

 

 

(96,385

)

Operating Activities
Operating activities during 2025 provided cash of $674.4 million. Changes in operating assets and liabilities, net of businesses acquired used $72.5 million due to a $340.6 million increase in operating assets and a $268.1 million increase in operating liabilities. The increase in operating assets was primarily due to increases in accounts receivable of $305.6 million. The increase in operating liabilities was primarily due to increases in accounts payable and other liabilities of $208.8 million.
Operating activities during 2024 provided cash of $672.2 million. Changes in operating assets and liabilities used cash of $23.9 million. This was due to a $75.5 million decrease in operating assets and a $51.6 million decrease in operating liabilities. The decrease in operating assets was primarily due to a decrease in other assets of $119.5 million, partially offset by a $52.7 million increase in accounts receivable. The decrease in operating liabilities was primarily due to a $48.2 million decrease in accounts payable.
Investing Activities
Investing activities during 2025 included $224.0 million used for purchases of property, plant, and equipment, $144.4 million used for acquisition of businesses, net of cash and cash equivalents acquired, $33.0 million used for purchases of marketable securities, and $25.5 million used for purchase of investment in a business, partially offset by $49.0 million provided by proceeds from maturities of marketable securities and $9.3 million provided by proceeds from sales of marketable securities.
Investing activities during 2024 included $532.1 million used for investments in businesses, $198.1 million used for purchases of property, plant and equipment, and $45.8 million used for purchases of marketable securities, partially offset by $90.3 million in proceeds from the sale of a business, $38.4 million and $24.0 million in proceeds from the maturities and sales of marketable securities, respectively, and $0.9 million in proceeds from life insurance.
Financing Activities
Financing activities during 2025 included $702.1 million used for repurchase of common stock, $76.3 million used for dividend payments, and $15.7 million used for payments related to net settlement of employee stock compensation awards, partially offset by net proceeds from borrowings on revolving credit facility of $200.0 million and $31.9 million from issuance of common stock under stock purchase and stock option plans.
Financing activities during 2024 included $198.6 million used for the repurchase of common stock, $76.4 million used for dividend payments, and $14.1 million used for payments related to net settlement of employee stock compensation awards, partially offset by $37.3 million from the issuance of common stock under employee stock purchase and stock option plans.
Material Cash Requirements
In January 2025, May 2025, August 2025 and November 2025, our Board of Directors declared a quarterly cash dividend of $0.12 per share. Total dividend payments in 2025 were $76.3 million. In January 2024, May 2024, August 2024 and November 2024, our Board of Directors declared a quarterly cash dividend of $0.12 per share. Total dividend payments in 2024 were $76.4 million.
In January 2023, our Board of Directors approved a repurchase program for up to $2.0 billion of common stock. In 2025, we repurchased 6.3 million shares of common stock for $702.1 million, which excludes related excise tax, at an average price of $112.21

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per share. In 2024, we repurchased 1.7 million shares of common stock for $198.6 million, which excludes related excise tax, at an average price of $114.63 per share. The cumulative repurchases as of December 31, 2025, under the 2023 repurchase program, were 12.0 million shares of common stock for $1,297.3 million, which excludes related excise tax, at an average price per share of $109.38.
In January 2026, our Board of Directors declared a quarterly cash dividend of $0.13 per share to be paid on March 13, 2026 to shareholders of record as of February 13, 2026.
While we declared a quarterly cash dividend and authorized a share repurchase program, we may reduce or eliminate the cash dividend or share repurchase program in the future. Future cash dividends and stock repurchases are subject to the discretion of our Board of Directors, which will consider, among other things, our earnings, capital requirements and financial condition.
At December 31, 2025, our future contractual obligations were related to debt, leases, retirement plan liabilities, deferred tax benefits, and purchase obligations. See Note L: “Debt,” Note K: “Leases,” Note R: “Retirement Plans,” and Note U: “Income Taxes” of Notes to Consolidated Financial Statements in this Annual Report for information about those obligations, which Notes are incorporated by reference into this section. Our purchase obligations were approximately $1,473.0 million, with $1,415.1 million expected to be paid within twelve months.
We believe our cash, cash equivalents, marketable securities and senior secured revolving credit facility will be sufficient to pay our quarterly dividend and meet our working capital and expenditure needs for at least the next twelve months. Inflation has not had a significant long-term impact on earnings.
Retirement Plans
ASC 715-20, “ Compensation—Retirement Benefits—Defined Benefit Plans, ” requires an employer with defined benefit plans or other postretirement benefit plans to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plans as defined by ASC 715-20. The pension asset or liability represents the difference between the fair value of the pension plans’ assets and the projected benefit obligation as of December 31. For other postretirement benefit plans, the liability is the difference between the fair value of the plan’s assets and the accumulated postretirement benefit obligation as of December 31.
For the year ended December 31, 2025, our pension expense, which includes the U.S. Qualified Pension Plan (“U.S. Plan”), certain qualified plans for non-U.S. subsidiaries, and a U.S. Supplemental Executive Defined Benefit Plan, was approximately $4.3 million. Pension expense is calculated based upon a number of actuarial assumptions. Discount rate and expected return on assets are two assumptions which are important elements of pension plan expense and asset/liability measurement. We evaluate our discount rate and expected rate of return on assets assumptions annually on a plan and country specific basis. We evaluate other assumptions related to demographic factors, such as retirement age, mortality and turnover periodically, and update them to reflect our experience and expectations for the future.
In developing the expected return on U.S. Plan assets assumption, we evaluated input from our investment manager and pension consultants, including their forecast of asset class return expectations. We believe that 5.05% was an appropriate rate of return on assets to use for 2025. The December 31, 2025, asset allocation for our U.S. Plan was 94.0% invested in fixed income securities, 5% invested in equity securities, and 1% invested in other securities. Our investment manager regularly reviews the actual asset allocation and periodically rebalances the portfolio to ensure alignment with our target allocations.
We recognize net actuarial gains and losses and the change in the fair value of plan assets in our operating results in the year in which they occur or upon any interim remeasurement of the plans. We calculate the expected return on plan assets using the fair value of the plan assets. Actuarial gains and losses are generally measured annually as of December 31 and, accordingly, recorded during the fourth quarter of each year or upon any interim remeasurement of the plans.
The discount rate that we utilized for determining future pension obligations for the U.S. Plan is based on the FTSE Pension Index adjusted for the U.S. Plan’s expected cash flows and was 5.30% at December 31, 2025, down from 5.45% at December 31, 2024. We estimate that in 2026 we will recognize approximately $0.1 million of pension income for the U.S. Plan. The U.S. Plan pension income estimate for 2026 is based on a 5.30% discount rate and a 5.10% return on assets. Future pension expense or income will depend on future investment performance, changes in future discount rates and various other factors related to the employee population participating in our pension plans.
As of December 31, 2025, our pension plans had no unrecognized pension prior service cost.

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The assets of the U.S. Plan consist substantially of fixed income securities. U.S. Plan assets have decreased from $81.4 million at December 31, 2024 to $80.6 million at December 31, 2025, while the U.S. Plan’s liability decreased from $69.4 million at December 31, 2024 to $68.6 million at December 31, 2025.
Our funding policy is to make contributions to our pension plans in accordance with local laws and to the extent that such contributions are tax deductible. During 2025, we made contributions of $3.3 million to the U.S. supplemental executive defined benefit pension plan, and $1.2 million to certain qualified plans for non-U.S. subsidiaries. In 2026, we expect to contribute approximately $3.6 million to the U.S. supplemental executive defined benefit pension plan. Contributions to be made in 2026 to certain qualified plans for non-U.S. subsidiaries are based on local statutory requirements and are estimated at approximately $1.7 million.
Equity Compensation Plans
As of December 31, 2025, our stockholders have approved two equity compensations plans under which equity securities are authorized for issuance: our 1996 Employee Stock Purchase Plan (the “ESPP”), as discussed in Note S: “Stock-Based Compensation” in Notes to Consolidated Financial Statements, as well as our Equity and Cash Compensation Incentive Plan (the “Equity Plan”). The plans were initially approved by our stockholders on March 19, 1996 and May 12, 2006, respectively, and most recently approved as amended on May 7, 2021, and May 12, 2025, respectively.
Under the ESPP and the Equity Plan, as amended, our stockholders have approved an aggregate of 33.4 million and 32.0 million shares, respectively, issuable thereunder. At our annual meeting of stockholders held May 9, 2025, our stockholders approved an amendment and restatement of the Equity Plan. The amendments, among other changes, renamed the plan to the “Equity and Cash Compensation Incentive Plan,” eliminated the then-current term end date of May 12, 2025, and added a provision that incentive stock options may not be granted without shareholder approval following the ten-year anniversary of the Board’s approval of the amended Equity Plan, which is March 24, 2035.
The following table presents information about these plans as of December 31, 2025 (share numbers in thousands):
 

Plan category

 

Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights (1)

 

 

Weighted-average
exercise price of
outstanding options,
warrants and rights

 

 

Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column one) (2)

 

Equity plans approved by shareholders

 

 

1,798

 

 

$

108.00

 

 

 

6,227

 

 
(1) Includes 1,634,922 shares of restricted stock units that are not included in the calculation of the weighted average exercise price.

(2) Consists of 3,050,235 securities available for issuance under the 2006 Equity Plan and 3,176,598 of securities available for issuance under the Employee Stock Purchase Plan.

The purpose of the 2006 Equity Plan is to motivate employees, officers and directors by providing equity ownership and compensation opportunities in Teradyne. The aggregate number of shares available under the 2006 Equity Plan as of December 31, 2025, was 3,050,235 shares of our common stock. The 2006 Equity Plan authorizes the grant of stock-based awards in the form of (1) non-qualified and incentive stock options, (2) stock appreciation rights, (3) restricted stock awards and restricted stock unit awards, (4) phantom stock, and (5) other stock-based awards. Awards may be tied to time-based vesting schedules and/or performance-based vesting measured by reference to performance criteria chosen by the Compensation Committee of the Board of Directors, which administers the 2006 Equity Plan. Awards may be made to any employee, officer, consultant and advisor of Teradyne and our subsidiaries, as well as to our directors. The maximum number of shares of stock-based awards that may be granted to one participant during any one fiscal year is 2,000,000 shares of common stock.
As of December 31, 2025, total unrecognized compensation expense related to non-vested restricted stock units and options was $97.3 million and is expected to be recognized over a weighted average period of 2.6 years.

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Comparative Stock Performance Graph
The following graph compares the change in our cumulative total shareholder return in our common stock with (i) the Standard & Poor’s 500 Index and (ii) the Morningstar Global Semiconductor Equipment & Materials GR USD Industry Group. The comparison assumes $100.00 was invested on December 31, 2020 in our common stock and in each of the foregoing indices and assumes reinvestment of dividends, if any. Historic stock price performance is not necessarily indicative of future price performance.
 

 
Recently Issued Accounting Pronouncements
For a description of accounting changes and recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements, see Note C: “Recently Issued Accounting Pronouncements,” of this Form 10-K.
Item 7A: Quantitative and Q ualitative Disclosures about Market Risks
Concentration of Credit Risk
Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash equivalents, marketable securities, forward currency contracts and accounts receivable. Our cash equivalents consist primarily of money market funds invested in U.S. Treasuries and government agencies. Our fixed income available-for-sale marketable securities have a minimum rating of AA by one or more of the major credit rating agencies. We place forward currency contracts with high credit-quality financial institutions in order to minimize credit risk exposure. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of geographically dispersed customers. We perform ongoing credit evaluations of our customers’ financial condition and from time to time may require customers to provide a letter of credit from a bank to secure accounts receivable. As of December 31, 2025, two customers primarily of our Semiconductor Test segment accounted for approximately 22% and 20%, respectively, of our accounts receivable balance. As of December 31, 2024, two customers of our Semiconductor Test segment each accounted for 10% of our accounts receivable balance.
Exchange Rate Risk Management
We regularly enter into foreign currency forward contracts to hedge the value of our monetary assets and liabilities in Japanese Yen, British Pound, Korean Won, Taiwan Dollar, Singapore Dollar, Euro, Philippine Peso, Chinese Yuan, and Danish Krone. These foreign currency forward contracts have maturities of approximately one month. These contracts are used to minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities.

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We also enter into foreign currency forward contracts to hedge the impact of exchange rates on our revenues in Japanese Yen. These contracts have maturities of less than one year. We do not engage in currency speculation.
On January 13, 2025, we entered into a forward to buy 23.7 million Euros which expired on February 3, 2025. On November 7, 2023, in connection with our agreement to acquire 10% investment in Technoprobe S.p.A, we purchased a call option to buy 481.0 million Euros, which expired in April 2024. On April 12, 2024, we entered into a forward to buy 481.0 million Euros, which expired on May 23, 2024.
We performed a sensitivity analysis assuming a hypothetical 10% fluctuation in foreign exchange rates to the hedging contracts and the underlying exposures described above. As of December 31, 2025, and 2024, the analysis indicated that these hypothetical market movements would not have a material effect on our consolidated financial position, results of operations or cash flows.
Interest Rate Risk Management
We are exposed to potential losses due to changes in interest rates. Our interest rate exposure is primarily related to short-term and long-term marketable securities.
In order to estimate the potential loss due to interest rate risk, a fluctuation in interest rates of 25 basis points was assumed. Market risk for the short and long-term marketable securities was estimated as the potential change in the fair value resulting from a hypothetical change in interest rates for securities contained in the investment portfolio. The potential change in the fair value from changes in interest rates is immaterial as of December 31, 2025, and 2024.

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Item 8: Financial Statements and Supplementary Data
 
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Teradyne, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Teradyne, Inc. and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, of comprehensive income, of convertible common shares and shareholders’ equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2025 appearing under Item 15(c) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.
Revenue Recognition - Certain Products Revenue
As described in Note B to the consolidated financial statements, for transactions that do not meet the criteria for over time recognition, the Company recognizes revenue for products at a point in time when shipped or delivered based on contractual terms. The transaction price is the amount of consideration the Company expects to be entitled to in exchange for such products, which is generally at contractually stated prices. The Company’s total products revenue was $2.7 billion for the year ended December 31, 2025, of which a majority relates to certain products revenue.
The principal consideration for our determination that performing procedures relating to revenue recognition for certain products revenue is a critical audit matter is a high degree of auditor effort in performing procedures related to revenue recognition for certain of the Company’s products revenue.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the recognition process for certain products revenue. These procedures also included, among others (i) testing the revenue recognized for a sample of certain products revenue transactions by obtaining and inspecting source documents, such as purchase orders, invoices, and proof of shipment or delivery; (ii) testing the timing of revenue recognized for a sample of certain products revenue transactions that occurred near period end by obtaining and inspecting source documents, such as purchase orders, invoices, and proof of shipment or delivery; and (iii) confirming a sample of outstanding customer invoice balances as of December 31, 2025 and, for confirmations not returned, obtaining and inspecting source documents, such as purchase orders, invoices, proof of shipment or delivery, and subsequent cash receipts.
Annual Goodwill Impairment Assessment – Robotics Reporting Unit
As described in Notes B and N to the consolidated financial statements, the Company’s goodwill balance was $521.0 million as of December 31, 2025, and the goodwill associated with the Robotics reporting unit was $416.4 million. Management assesses goodwill for impairment at least annually in the fourth quarter, as of December 31, on a reporting unit basis, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. As disclosed by management, potential impairment is identified by comparing the fair value of a reporting unit to its carrying value, including goodwill. In performing the quantitative goodwill impairment test, management determines the fair value of a reporting unit using the results derived from an income approach and a market approach, equally weighting the fair value determined under each approach. Under the income approach, determining fair value for the Robotics reporting unit required the use of significant judgment by management and included assumptions relating to projected revenue growth rates, projected earnings before interest, taxes, depreciation, and amortization (“EBITDA”) margins, and discount rates. Under the market approach, management estimated the fair value of the Robotics reporting unit by utilizing the market comparable method which is based on revenue multiples from comparable companies.
The principal considerations for our determination that performing procedures relating to the annual goodwill impairment assessment of the Robotics reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the Robotics reporting unit; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to projected revenue growth rates, projected EBITDA margins, and the discount rate used in the income approach and revenue multiples from comparable companies used in the market approach; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Robotics reporting unit. These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the Robotics reporting unit; (ii) evaluating the

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appropriateness of the income and market approaches used by management; (iii) testing the completeness and accuracy of underlying data used in the income and market approaches; and (iv) evaluating the reasonableness of the significant assumptions used by management related to projected revenue growth rates, projected EBITDA margins, and the discount rate used in the income approach and revenue multiples from comparable companies used in the market approach. Evaluating management’s assumptions related to projected revenue growth rates and projected EBITDA margins involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Robotics reporting unit; (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the income and market approaches and (ii) the reasonableness of the discount rate and revenue multiples from comparable companies assumptions.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
February 19, 2026
We have served as the Company’s auditor since 1968.

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TERADYNE, INC.
CONSOLIDATED BAL ANCE SHEETS
 

 

 

December 31,

 

 

 

2025

 

 

2024

 

 

 

(in thousands, except per share amount)

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

293,751

 

 

$

553,354

 

Marketable securities

 

 

28,247

 

 

 

46,312

 

Accounts receivable, less allowance for credit losses of $ 2,410  and $ 2,111  at December 31, 2025
   and December 31, 2024, respectively

 

 

786,913

 

 

 

471,426

 

Inventories, net

 

 

379,552

 

 

 

298,492

 

Prepayments

 

 

427,564

 

 

 

429,086

 

Other current assets

 

 

33,273

 

 

 

17,727

 

Total current assets

 

 

1,949,300

 

 

 

1,816,397

 

Property, plant and equipment, net

 

 

562,999

 

 

 

508,171

 

Operating lease right-of-use assets, net

 

 

76,635

 

 

 

70,185

 

Marketable securities

 

 

126,256

 

 

 

124,121

 

Deferred tax assets

 

 

275,265

 

 

 

222,438

 

Retirement plans assets

 

 

12,059

 

 

 

11,994

 

Equity method investment

 

 

537,098

 

 

 

494,494

 

Other assets

 

 

71,697

 

 

 

49,620

 

Acquired intangible assets, net

 

 

51,271

 

 

 

15,927

 

Goodwill

 

 

521,019

 

 

 

395,367

 

Total assets

 

$

4,183,599

 

 

$

3,708,714

 

LIABILITIES

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

269,185

 

 

$

134,792

 

Accrued employees’ compensation and withholdings

 

 

254,973

 

 

 

204,991

 

Deferred revenue and customer advances

 

 

153,124

 

 

 

107,710

 

Other accrued liabilities

 

 

111,845

 

 

 

90,777

 

Operating lease liabilities

 

 

19,340

 

 

 

18,699

 

Short-term debt

 

 

200,000

 

 

 

—

 

Income taxes payable

 

 

106,740

 

 

 

67,610

 

Total current liabilities

 

 

1,115,207

 

 

 

624,579

 

Retirement plans liabilities

 

 

144,874

 

 

 

133,338

 

Long-term deferred revenue and customer advances

 

 

50,888

 

 

 

40,505

 

Deferred tax liabilities

 

 

5,378

 

 

 

1,038

 

Long-term other accrued liabilities

 

 

7,601

 

 

 

7,442

 

Long-term operating lease liabilities

 

 

63,899

 

 

 

57,922

 

Long-term income taxes payable

 

 

—

 

 

 

24,596

 

Total liabilities

 

 

1,387,847

 

 

 

889,420

 

Commitments and contingencies (Note O)

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Common stock, $ 0.125  par value, 1,000,000  shares authorized; 156,088  and 161,722  shares issued
   and outstanding at December 31, 2025, and December 31, 2024, respectively

 

 

19,511

 

 

 

20,215

 

Additional paid-in capital

 

 

1,989,911

 

 

 

1,909,538

 

Accumulated other comprehensive loss

 

 

41,895

 

 

 

( 81,220

)

Retained earnings

 

 

744,435

 

 

 

970,761

 

Total shareholders’ equity

 

 

2,795,752

 

 

 

2,819,294

 

Total liabilities and shareholders’ equity

 

$

4,183,599

 

 

$

3,708,714

 

 
The accompanying notes are an integral part of the consolidated financial statements.

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TERADYNE, INC.
CONSOLIDATED ST ATEMENTS OF OPERATIONS
 

 

 

Years Ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

 

(in thousands, except per share amount)

 

Revenues:

 

 

 

 

 

 

 

 

 

Products

 

$

2,660,190

 

 

$

2,294,935

 

 

$

2,096,286

 

Services

 

 

529,834

 

 

 

524,945

 

 

 

580,012

 

Total revenues

 

 

3,190,024

 

 

 

2,819,880

 

 

 

2,676,298

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

Cost of products

 

 

1,136,026

 

 

 

960,888

 

 

 

882,892

 

Cost of services

 

 

196,653

 

 

 

210,065

 

 

 

256,658

 

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

 

 

1,332,679

 

 

 

1,170,953

 

 

 

1,139,550

 

Gross profit

 

 

1,857,345

 

 

 

1,648,927

 

 

 

1,536,748

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Selling and administrative

 

 

648,874

 

 

 

617,047

 

 

 

577,315

 

Engineering and development

 

 

504,596

 

 

 

460,876

 

 

 

418,089

 

Acquired intangible assets amortization

 

 

15,270

 

 

 

18,764

 

 

 

18,999

 

Restructuring and other

 

 

38,554

 

 

 

15,571

 

 

 

21,277

 

Gain on sale of business

 

 

—

 

 

 

( 57,119

)

 

 

—

 

Total operating expenses

 

 

1,207,294

 

 

 

1,055,139

 

 

 

1,035,680

 

Income from operations

 

 

650,051

 

 

 

593,788

 

 

 

501,068

 

Non-operating (income) expenses:

 

 

 

 

 

 

 

 

 

Interest income

 

 

( 15,696

)

 

 

( 24,772

)

 

 

( 27,348

)

Interest expense

 

 

6,846

 

 

 

3,587

 

 

 

3,806

 

Other (income) expense, net

 

 

5,641

 

 

 

5,887

 

 

 

( 962

)

Income before income taxes and equity in net earnings of affiliate

 

 

653,260

 

 

 

609,086

 

 

 

525,572

 

Income tax provision

 

 

79,299

 

 

 

59,503

 

 

 

76,820

 

Income before equity in net earnings of affiliate

 

 

573,961

 

 

 

549,583

 

 

 

448,752

 

Equity in net earnings of affiliate

 

 

( 19,914

)

 

 

( 7,211

)

 

 

—

 

Net income

 

$

554,047

 

 

$

542,372

 

 

$

448,752

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

3.48

 

 

$

3.41

 

 

$

2.91

 

Diluted

 

$

3.47

 

 

$

3.32

 

 

$

2.73

 

Weighted average common shares—basic

 

 

159,119

 

 

 

159,083

 

 

 

154,310

 

Weighted average common shares—diluted

 

 

159,719

 

 

 

163,314

 

 

 

164,304

 

 
The accompanying notes are an integral part of the consolidated financial statements.

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TERADYNE, INC.
CONSOLIDATED STATEMEN TS OF COMPREHENSIVE INCOME
 

 

 

Years Ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

Net income

 

$

554,047

 

 

$

542,372

 

 

$

448,752

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment, net of tax of $ 0 , $ 0 , and
   $ 0 , respectively

 

 

122,617

 

 

 

( 52,847

)

 

 

17,407

 

Available-for-sale marketable securities:

 

 

 

 

 

 

 

 

 

Unrealized (losses) gains on marketable securities arising during
   period, net of tax of $ 255 , $( 470 ), and $ 568 , respectively

 

 

1,147

 

 

 

( 1,699

)

 

 

2,423

 

Less: Reclassification adjustment for (gains) losses included in net income,
   net of tax of $ 27 , $ 24 , and $ 12 , respectively

 

 

89

 

 

 

86

 

 

 

44

 

 

 

1,236

 

 

 

( 1,613

)

 

 

2,467

 

Cash flow hedges:

 

 

 

 

 

 

 

 

 

Unrealized (losses) gains arising during period, net of tax of $( 109 ), $ 593 ,
   and $ 1,537 , respectively

 

 

( 381

)

 

 

2,100

 

 

 

5,464

 

Less: Reclassification adjustment for losses (gains) included in
   net income, net of tax of $( 100 ), $( 527 ), and $( 686 ), respectively

 

 

( 350

)

 

 

( 1,875

)

 

 

( 2,441

)

 

 

 

( 731

)

 

 

225

 

 

 

3,023

 

Defined benefit post-retirement plan:

 

 

 

 

 

 

 

 

 

Amortization of prior service credit, net of tax of $( 2 ), $( 2 ), and
   $( 2 ), respectively

 

 

( 7

)

 

 

( 7

)

 

 

( 7

)

Other comprehensive income (loss)

 

 

123,115

 

 

 

( 54,242

)

 

 

22,890

 

Comprehensive income

 

$

677,162

 

 

$

488,130

 

 

$

471,642

 

 
The accompanying notes are an integral part of the consolidated financial statements.
 

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TERADYNE, INC.
CONSOLIDATED STATEMENTS OF CONVERTIBLE COMMON SHARES AND SHAREHOLDERS' EQUITY
 

 

 

Shareholders’ Equity

 

 

 

Common
Stock Shares

 

 

Common
Stock
Par Value

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Other
Comprehensive
Income (loss)

 

 

Retained
Earnings

 

 

Total
Shareholders’
Equity

 

 

 

 

Year Ended December 31, 2022

 

 

155,759

 

 

$

19,470

 

 

$

1,755,963

 

 

$

( 49,868

)

 

$

725,729

 

 

 

2,451,294

 

Net issuance of common stock under stock-based plans

 

 

848

 

 

 

106

 

 

 

13,371

 

 

 

 

 

 

 

 

 

13,477

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

57,940

 

 

 

 

 

 

 

 

 

57,940

 

Repurchase of common stock

 

 

( 3,909

)

 

 

( 489

)

 

 

 

 

 

 

 

 

( 400,040

)

 

 

( 400,529

)

Cash dividends ($ 0.44  per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

( 67,927

)

 

 

( 67,927

)

Settlements of convertible notes

 

 

1,072

 

 

 

133

 

 

 

( 133

)

 

 

 

 

 

 

 

 

—

 

Exercise of convertible notes hedge call options

 

 

( 1,072

)

 

 

( 133

)

 

 

133

 

 

 

 

 

 

 

 

 

—

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

448,752

 

 

 

448,752

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

22,890

 

 

 

 

 

 

22,890

 

Year Ended December 31, 2023

 

 

152,698

 

 

$

19,087

 

 

$

1,827,274

 

 

$

( 26,978

)

 

$

706,514

 

 

$

2,525,897

 

Net issuance of common stock under stock-based plans

 

 

728

 

 

 

91

 

 

 

23,137

 

 

 

 

 

 

 

 

 

23,228

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

60,397

 

 

 

 

 

 

 

 

 

60,397

 

Warrant exercises

 

 

10,036

 

 

 

1,254

 

 

 

( 1,270

)

 

 

 

 

 

 

 

 

( 16

)

Repurchase of common stock

 

 

( 1,740

)

 

 

( 217

)

 

 

 

 

 

 

 

 

( 201,666

)

 

 

( 201,883

)

Cash dividends ($ 0.48  per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

( 76,459

)

 

 

( 76,459

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

542,372

 

 

 

542,372

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

( 54,242

)

 

 

 

 

 

( 54,242

)

Year Ended December 31, 2024

 

 

161,722

 

 

$

20,215

 

 

$

1,909,538

 

 

$

( 81,220

)

 

$

970,761

 

 

$

2,819,294

 

Net issuance of common stock under stock-based plans

 

 

682

 

 

 

85

 

 

 

16,074

 

 

 

 

 

 

 

 

 

16,159

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

64,299

 

 

 

 

 

 

 

 

 

64,299

 

Repurchase of common stock

 

 

( 6,316

)

 

 

( 789

)

 

 

 

 

 

 

 

 

( 704,025

)

 

 

( 704,814

)

Cash dividends ($ 0.48  per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

( 76,348

)

 

 

( 76,348

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

554,047

 

 

 

554,047

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

123,115

 

 

 

 

 

 

123,115

 

Year Ended December 31, 2025

 

 

156,088

 

 

$

19,511

 

 

$

1,989,911

 

 

$

41,895

 

 

$

744,435

 

 

$

2,795,752

 

 
The accompanying notes are an integral part of the consolidated financial statements.

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TERADYNE, INC.
CONSOLIDATED STATE MENTS OF CASH FLOWS
 

 

 

Years Ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net income

 

$

554,047

 

 

$

542,372

 

 

$

448,752

 

Adjustments to reconcile net income from operations to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

Depreciation

 

 

111,445

 

 

 

100,977

 

 

 

92,118

 

Stock-based compensation

 

 

63,999

 

 

 

60,122

 

 

 

57,682

 

Equity in net earnings of affiliate

 

 

19,914

 

 

 

7,211

 

 

 

—

 

Losses (gains) on investments

 

 

( 5,420

)

 

 

10,056

 

 

 

( 14,915

)

Provision for excess and obsolete inventory

 

 

25,782

 

 

 

18,922

 

 

 

28,358

 

Amortization

 

 

16,536

 

 

 

18,764

 

 

 

18,768

 

Loss (gain) on sale of business

 

 

—

 

 

 

( 57,119

)

 

 

—

 

Deferred taxes

 

 

( 52,067

)

 

 

( 46,360

)

 

 

( 37,642

)

Retirement plan actuarial losses (gains)

 

 

683

 

 

 

( 4,355

)

 

 

2,703

 

Other

 

 

12,005

 

 

 

( 2,290

)

 

 

( 955

)

Changes in operating assets and liabilities, net of businesses acquired:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

( 305,601

)

 

 

( 52,659

)

 

 

70,977

 

Inventories

 

 

( 28,424

)

 

 

8,707

 

 

 

5,327

 

Prepayments and other assets

 

 

( 6,591

)

 

 

119,454

 

 

 

( 43,101

)

Accounts payable and other liabilities

 

 

208,848

 

 

 

( 54,386

)

 

 

46,782

 

Deferred revenue and customer advances

 

 

52,626

 

 

 

12,176

 

 

 

( 57,210

)

Retirement plans contributions

 

 

( 8,483

)

 

 

( 5,814

)

 

 

( 5,492

)

Income taxes

 

 

15,116

 

 

 

( 3,602

)

 

 

( 26,921

)

Net cash provided by operating activities

 

 

674,415

 

 

 

672,176

 

 

 

585,231

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

( 224,009

)

 

 

( 198,095

)

 

 

( 159,642

)

Acquisition of businesses, net of cash and cash equivalents acquired

 

 

( 144,380

)

 

 

—

 

 

 

—

 

Purchase of investment in a business

 

 

( 25,519

)

 

 

( 532,060

)

 

 

—

 

Purchases of marketable securities

 

 

( 32,999

)

 

 

( 45,796

)

 

 

( 161,906

)

Issuance of convertible loan

 

 

—

 

 

 

—

 

 

 

( 5,000

)

Proceeds from the sale of a business, net of cash and cash equivalents sold

 

 

—

 

 

 

90,348

 

 

 

—

 

Proceeds from maturities of marketable securities

 

 

48,951

 

 

 

38,353

 

 

 

85,042

 

Proceeds from sales of marketable securities

 

 

9,339

 

 

 

24,035

 

 

 

61,401

 

Proceeds from insurance

 

 

—

 

 

 

873

 

 

 

460

 

Net cash used for investing activities

 

 

( 368,617

)

 

 

( 622,342

)

 

 

( 179,645

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Proceeds from borrowings on revolving credit facility

 

 

250,000

 

 

 

185,000

 

 

 

—

 

Repayments of borrowings on revolving credit facility

 

 

( 50,000

)

 

 

( 185,000

)

 

 

—

 

Dividend payments

 

 

( 76,313

)

 

 

( 76,423

)

 

 

( 67,878

)

Repurchase of common stock

 

 

( 702,095

)

 

 

( 198,574

)

 

 

( 397,241

)

Payments related to net settlement of employee stock compensation awards

 

 

( 15,702

)

 

 

( 14,100

)

 

 

( 20,788

)

Payments of convertible debt principal

 

 

—

 

 

 

—

 

 

 

( 50,264

)

Issuance of common stock under stock purchase and stock option plans

 

 

31,860

 

 

 

37,330

 

 

 

34,259

 

Net cash used for financing activities

 

 

( 562,250

)

 

 

( 251,767

)

 

 

( 501,912

)

Effects of exchange rate changes on cash and cash equivalents

 

 

( 3,151

)

 

 

( 2,284

)

 

 

( 876

)

Decrease increase in cash and cash equivalents

 

 

( 259,603

)

 

 

( 204,217

)

 

 

( 97,202

)

Cash and cash equivalents at beginning of year

 

 

553,354

 

 

 

757,571

 

 

 

854,773

 

Cash and cash equivalents at end of year

 

$

293,751

 

 

$

553,354

 

 

$

757,571

 

Supplementary disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

 

 

Interest

 

$

3,164

 

 

$

767

 

 

$

296

 

Non-cash investing activities:

 

 

 

 

 

 

 

 

 

Capital expenditures incurred but not yet paid:

 

$

3,471

 

 

$

3,893

 

 

$

2,735

 

 
The accompanying notes are an integral part of the consolidated financial statements.

44

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TERADYNE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. THE COMPANY
Teradyne, Inc. (“Teradyne”) is a leading global provider of automated test equipment and robotics solutions. Teradyne’s automated test systems are used to test semiconductors, wireless products, data storage, silicon photonics, and complex electronics systems in many industries including consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Teradyne’s robotics product offerings consist primarily of collaborative robotic arms and autonomous mobile robots used by global manufacturing, logistics and industrial customers to improve quality and increase manufacturing and material handling efficiency while reducing costs. In the first quarter of 2025, Teradyne identified opportunities for operational synergies amongst our production board test, defense and aerospace, and wireless test businesses leading to the creation of the Product Test division as a new segment effective March 2025. Teradyne’s automated test equipment and robotics products and services include:
• semiconductor test (“Semiconductor Test”) systems;

• robotics (“Robotics”) products; and

• product test (“Product Test”) systems, which include circuit-board test and inspection systems, wireless test systems photonic integrated circuit (“PIC”) test solutions, and defense and aerospace test instrumentation and systems .

 
B. ACCOUNTING POLICIES
The consolidated financial statements include the accounts of Teradyne and its wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated. Certain prior years’ amounts were reclassified to conform to the current year presentation.
Preparation of Financial Statements and Use of Estimates
The preparation of consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an on-going basis, management evaluates its estimates, including those related to revenue, inventories, investments, goodwill, intangible and other long-lived assets, accounts receivable, income taxes, deferred tax assets and liabilities, pensions, warranties, and loss contingencies. Management bases its estimates on historical experience and on appropriate and customary assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Annual Report on Form 10-K. These estimates may change, as new events occur and additional information is obtained. Actual results may differ significantly from these estimates under different assumptions or conditions.

Revenue Recognition
Revenue from Contracts with Customers
In accordance with Accounting Standards Codification (“ASC”) 606, Teradyne recognizes revenues, when or as control is transferred to a customer. Teradyne’s determination of revenue is dependent upon a five-step process outlined below.
• Teradyne accounts for a contract with a customer when there is written approval, the contract is committed, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of collection.

• Teradyne periodically enters into contracts with customers in which a customer may purchase a combination of goods and services, such as products with extended warranty obligations. Teradyne determines performance obligations by assessing whether the products or services are distinct from the other elements of the contract. In order to be distinct, the product or service must perform either on its own or with readily available resources and must be separate within the context of the contract.

45

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• Teradyne determines the transaction price to be the amount of consideration to which Teradyne expects to be entitled to, which is generally at contractually stated prices.

• Transaction price is allocated to each individual performance obligation based on the standalone selling price of that performance obligation. Teradyne uses standalone transactions when available to value each performance obligation. If standalone transactions are not available, Teradyne will estimate the standalone selling price through market assessments or cost plus a reasonable margin analysis. Any discounts from standalone selling price are spread proportionally to each performance obligation.

• In order to determine the appropriate timing for revenue recognition, Teradyne first determines if the transaction meets any of three criteria for over time recognition. If the transaction meets the criteria for over time recognition, Teradyne recognizes revenue as the good or service is delivered. Teradyne uses input variables such as hours or months utilized or costs incurred to determine the amount of revenue to recognize in a given period. Input variables are used as they best align consumption with benefit to the customer. For transactions that do not meet the criteria for over time recognition, Teradyne will recognize revenue at a point in time based on an assessment of the five criteria for transfer of control. Teradyne has concluded that revenue should be recognized when shipped or delivered based on contractual terms. Typically, acceptance of Teradyne’s products and services is a formality as Teradyne delivers similar systems, instruments and robots to standard specifications. In cases where acceptance is not deemed a formality, Teradyne will defer revenue recognition until customer acceptance.

Performance Obligations
Products
Teradyne products consist primarily of test systems and instruments and robotics products. Teradyne’s hardware is typically recognized at a point in time upon transfer of control to the customer.
Services
Teradyne services consist of extended warranties, training and application support, service agreements, post contract customer support (“PCS”) and replacement parts. Each service is recognized based on relative standalone selling price. Extended warranty, training and support, service agreements and PCS are recognized over time based on the period of service. Replacement parts are recognized at a point in time upon transfer of control to the customer.
Teradyne does not allow customer returns or provide refunds to customers for any products or services. Teradyne products include a standard 12 -month warranty. This warranty is not considered a distinct performance obligation because it does not obligate Teradyne to provide a separate service to the customer and it cannot be purchased separately. Cost related to warranties are included in cost of revenues when product revenues are recognized.
As of December 31, 2025, and 2024, deferred revenue and customer advances consisted of the following and are included in the short and long-term deferred revenue and customer advances:
 

 

 

2025

 

 

2024

 

 

 

(in thousands)

 

Maintenance, service and training

 

$

62,337

 

 

$

58,473

 

Customer advances, undelivered elements and other

 

 

85,762

 

 

 

48,118

 

Extended warranty

 

 

55,913

 

 

 

41,624

 

Total deferred revenue and customer advances

 

$

204,012

 

 

$

148,215

 

 

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Product Warranty
Teradyne generally provides a one-year warranty on its products, commencing upon installation, acceptance or shipment. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based on historical experience. Related costs are charged to the warranty accrual as incurred. The balance below is included in other accrued liabilities:
 

 

 

Amount

 

 

 

(in thousands)

 

Balance at December 31, 2022

 

$

14,181

 

Accruals for warranties issued during the period

 

 

21,644

 

Accruals related to pre-existing warranties

 

 

( 1,576

)

Settlements made during the period

 

 

( 18,551

)

Balance at December 31, 2023

 

 

15,698

 

Accruals for warranties issued during the period

 

 

11,315

 

Accruals related to pre-existing warranties

 

 

( 1,078

)

Settlements made during the period

 

 

( 12,973

)

Balance at December 31, 2024

 

 

12,962

 

Accruals for warranties issued during the period

 

 

24,020

 

Accruals related to pre-existing warranties

 

 

( 291

)

Settlements made during the period

 

 

( 17,541

)

Balance at December 31, 2025

 

$

19,150

 

 
When Teradyne receives revenue for extended warranties, beyond one year, it is deferred and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred. The balance below is included in short and long-term deferred revenue and customer advances:
 

 

 

Amount

 

 

 

(in thousands)

 

Balance at December 31, 2022

 

$

56,180

 

Deferral of new extended warranty revenue

 

 

14,330

 

Recognition of extended warranty deferred revenue

 

 

( 35,613

)

Balance at December 31, 2023

 

 

34,897

 

Deferral of new extended warranty revenue

 

 

29,990

 

Recognition of extended warranty deferred revenue

 

 

( 23,263

)

Balance at December 31, 2024

 

 

41,624

 

Deferral of new extended warranty revenue

 

 

39,433

 

Recognition of extended warranty deferred revenue

 

 

( 25,144

)

Balance at December 31, 2025

 

$

55,913

 

 
Accounts Receivable and Allowance for Credit Losses
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Teradyne maintains allowances for estimated losses resulting from the inability of its customers to make required payments. Estimated allowances for credit losses are reviewed periodically taking into account the customer’s recent payment history, the customer’s current financial statements and other information regarding the customer’s creditworthiness. Account balances are written off against the allowance when it is determined the receivable will not be recovered.
Teradyne sells certain trade accounts receivables on a non-recourse basis to third-party financial institutions pursuant to factoring agreements. Teradyne accounts for these transactions as sales of receivables and presents cash proceeds as a cash provided by operating activities in the consolidated statements of cash flows. Total trade accounts receivable sold under the factoring agreements were $ 43.4 million and $ 129.0 million during 2025 and 2024 , respectively. Factoring fees for the sales of receivables are recorded in interest expense and are not material.

Equity Method Investments
Teradyne accounts for investments using the equity method of accounting when it has significant influence over the financial and operating policies, but not control, of the investee. The equity method investments are initially recorded at cost and included in

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‘Equity method investment’ in the consolidated balance sheet. Teradyne records its share of investee's net income or loss and other comprehensive income, and the amortization of equity method basis difference, calculated as the difference between the investment and the amount of underlying equity in net assets acquired, on a 3-month lag, which is applied consistently from period to period. Teradyne's share of investee's net income and the amortization of equity method basis difference are reported in ‘Equity in net earnings of affiliate’ in the consolidated statement of operations. Teradyne includes its share of investee's other comprehensive income and a cumulative translation adjustment in the consolidated statements of comprehensive income. Teradyne monitors on an ongoing basis its equity method investments for indicators of other-than-temporary declines in fair value below carrying value.

Inventories
Inventories are stated at the lower of cost (first-in, first-out basis) or net realizable value. On a quarterly basis, Teradyne uses consistent methodologies to evaluate all inventories for net realizable value. Teradyne records a provision for both excess and obsolete inventory when such write-downs or write-offs are identified through the quarterly review process. The inventory valuation is based upon assumptions about future demand, product mix and possible alternative uses.

Investments
Teradyne accounts for its investments in debt and equity securities in accordance with the provisions of ASC 320-10, “ Investments—Debt and Equity Securities .” ASC 320-10 requires that certain debt and equity securities be classified into one of three categories; trading, available-for-sale or held-to-maturity securities. On a quarterly basis, Teradyne reviews its investments to identify and evaluate those that have an indication of a potential other-than-temporary impairment. Factors considered in determining whether a loss is other-than-temporary include:
• The length of time and the extent to which the market value has been less than cost;

• The financial condition and near-term prospects of the issuer; and

• The intent and ability to retain the investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value.

Teradyne uses the market and income approach techniques to value its financial instruments and there were no changes in valuation techniques during the twelve months ended December 31, 2025, and 2024.
Teradyne measures its debt and equity investments at fair value, in accordance with ASC 820-10, “ Fair Value Measurements and Disclosures. ” ASC 820-10 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:
Level 1: Quoted prices in active markets for identical assets as of the reporting date;
Level 2: Inputs other than Level 1, that are observable either directly or indirectly as of the reporting date. For example, a common approach for valuing fixed income securities is the use of matrix pricing. Matrix pricing is a mathematical technique used to value securities by relying on the securities’ relationship to other benchmark quoted prices, and is considered a Level 2 input; or
Level 3: Unobservable inputs that are not supported by market data. Unobservable inputs are developed based on the best information available, which might include Teradyne’s own data.
Teradyne’s debt investments are classified as Level 2, and equity investments are classified as Level 1.

Financial Assets and Financial Liabilities
Teradyne records changes in fair value of equity securities directly in earnings and unrealized gains and losses in other (income) expense, net, in accordance with ASU 2016-01, “ Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities .”

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Prepayments
Prepayments consist of the following:
 

 

 

2025

 

 

2024

 

 

 

(in thousands)

 

Contract manufacturer and supplier prepayments

 

$

364,170

 

 

$

365,875

 

Prepaid maintenance and other services

 

 

16,662

 

 

 

22,176

 

Prepaid taxes

 

 

9,861

 

 

 

22,211

 

Other prepayments

 

 

36,871

 

 

 

18,824

 

Total prepayments

 

$

427,564

 

 

$

429,086

 

Retirement and Postretirement Plans
Teradyne recognizes net actuarial gains and losses and the change in the fair value of the plan assets in its operating results in the year in which they occur or upon any interim remeasurement of the plans. Teradyne calculates the expected return on plan assets using the fair value of the plan assets. Actuarial gains and losses are generally measured annually as of December 31 and, accordingly, recorded during the fourth quarter of each year or upon any interim remeasurement of the plans.
Teradyne reports net periodic pension cost and net periodic postretirement benefit costs in accordance with ASU 2017-07, “ Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost .” The service cost component of net benefit costs is reported in the same line item in the consolidated statement of operations as other employee compensation costs. The non-service components of net benefit costs such as interest cost, expected return on assets, amortization of prior service cost, and actuarial gains or losses, are reported within other (income) expense, net.

Goodwill, Intangible and Long-Lived Assets
Teradyne accounts for goodwill and intangible assets in accordance with ASC 350-10, “ Intangibles-Goodwill and Other. ” Intangible assets are amortized over their estimated useful economic life and are carried at cost less accumulated amortization. Goodwill is assessed for impairment at least annually in the fourth quarter, as of December 31, on a reporting unit basis, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired.
In accordance with ASC 350-10, Teradyne has the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If Teradyne determines this is the case, Teradyne is required to perform a quantitative goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized. If Teradyne determines that it is more likely than not that the fair value of the reporting unit is greater than its carrying amounts, a quantitative goodwill impairment test is not required.
In accordance with ASC 360-10, “ Impairment or Disposal of Long-Lived Assets, ” Teradyne reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the estimated undiscounted cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value based on a discounted cash flows analysis. The cash flows estimates used to determine the impairment, if any, contain management’s best estimates using appropriate assumptions and projections at that time.

Business Combinations
Teradyne recognizes the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The fair value of identifiable intangible assets is based on detailed cash flows valuations that use information and assumptions provided by management. Teradyne uses all pertinent information known at the time of acquisition to estimate the fair value of contingent consideration at the time of the acquisition using all pertinent information known to us at the time to assess the probability of payment of contingent amounts or through the use of a Monte Carlo simulation model. Teradyne allocates any excess purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed to goodwill. The assumptions used in the valuations for our acquisitions may differ materially from actual results depending on performance of the acquired businesses and other factors. While Teradyne believes the assumptions used were appropriate, different assumptions in the valuation of assets acquired and liabilities assumed could have a material impact on the timing and extent of impact on our statements of operations. Goodwill is assigned to reporting units as of the date of the related acquisition.

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Property, Plant and Equipment
Property, plant and equipment are stated at cost and depreciated over the estimated useful lives of the assets. Leasehold improvements and major renewals are capitalized and included in property, plant and equipment accounts, while expenditures for maintenance and repairs and minor renewals are charged to expense. When assets are retired, the assets and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of operations.
Teradyne provides for depreciation of its assets principally on the straight-line method with the cost of the assets being charged to expense over their useful lives as follows:
 

Buildings

 

40  years

Building improvements

 

5  to 10  years

Leasehold improvements

 

Lesser of lease term or 10  years

Furniture and fixtures

 

10  years

Test systems manufactured internally

 

6  years

Machinery, equipment and software

 

3  to 5  years

 
Test systems manufactured internally are used by Teradyne for customer evaluations and manufacturing and support of its customers. Teradyne depreciates the test systems manufactured internally over a six-year life to cost of revenues, engineering and development, and selling and administrative expenses. Teradyne often sells internally manufactured test equipment to customers. Upon the sale of an internally manufactured test system, the net book value of the system is transferred to inventory and expensed as cost of revenues. The net book value of internally manufactured test systems sold in the years ended December 31, 2025, 2024, and 2023 was $ 25.2 million, $ 4.0 million, and $ 2.8 million, respectively.

Debt
Under ASC 470 Debt, Teradyne records all borrowings as short-term or long-term debt in the condensed consolidated balance sheet in accordance with Teradyne's ability and intent to repay the debt, as well as the contractual due date. When amounts are drawn on the revolver, interest is accrued and recognized within other accrued liabilities in the condensed consolidated balance sheet and expensed within Other (income) expense, net within the condensed consolidated statement of operations.
Teradyne accounts for a convertible debt instrument as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. Unsettled shares are recorded in current debt, and there is no recognition of a debt discount, which was previously amortized to interest expense. Settled shares reduce the outstanding debt balance in an amount equal to the cash paid, but do not result in any gain or loss on extinguishment. Teradyne uses the if-converted method in the diluted EPS calculation for convertible instruments.

Leases
Under ASC 842, a contract is or contains a lease when Teradyne has the right to control the use of an identified asset. Teradyne determines if an arrangement is a lease at inception of the contract, which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. The commencement date of the lease is the date that the lessor makes an underlying asset available for use by Teradyne. As of December 31, 2025, Teradyne does not have material leases that have not yet commenced.
Teradyne determines if the lease is an operating or finance lease at the lease commencement date based upon the terms of the lease and the nature of the asset. The lease term used to calculate the lease liability includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised.
The lease liability is measured at the present value of future lease payments, discounted using the discount rate for the lease at the commencement date. As Teradyne is typically unable to determine the implicit rate, Teradyne uses an incremental borrowing rate based on the lease term and economic environment at commencement date. Teradyne initially measures payments based on an index by using the applicable rate at lease commencement. Variable payments that do not depend on an index are not included in the lease liability and are recognized as they are incurred. The right-of-use (“ROU”) asset is initially measured as the amount of lease liability, adjusted for any initial lease costs, prepaid lease payments, and reduced by any lease incentives.

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Teradyne’s contracts often include non-lease components such as common area maintenance. Teradyne elected the practical expedient to account for the lease and non-lease components as a single lease component. For leases with a term of one year or less, Teradyne has elected not to record the lease asset or liability. Rent is recognized in the consolidated statement of earnings on a straight-line basis over the lease term. Teradyne includes lease costs within cost of revenues and operating expenses. See Note K: “Leases” .

Engineering and Development Costs
Teradyne’s products are highly technical and require a large and continuing engineering and development effort. Software development costs incurred prior to the establishment of technological feasibility are charged to expense. Software development costs incurred subsequent to the establishment of technological feasibility are capitalized until the product is available for release to customers. To date, the period between achieving technological feasibility and general availability of the product has been short and software development costs eligible for capitalization have not been material. Engineering and development costs are expensed as incurred and consist primarily of salaries, contractor fees including non-recurring engineering charges related to product design, allocated facility costs, depreciation, and tooling costs.

Stock Compensation Plans and Employee Stock Purchase Plan
Stock-based compensation expense is based on the grant-date fair value estimated in accordance with the provisions of ASC 718-10, “ Compensation-Stock Compensation .” Teradyne elects to account for forfeitures by applying an estimated forfeiture rate and recognizes compensation costs only for those stock-based compensation awards expected to vest. Under its stock compensation plans, Teradyne has granted stock options, restricted stock units and performance-based restricted stock units, and employees are eligible to purchase Teradyne’s common stock through its Employee Stock Purchase Plan (“ESPP”).
Excess tax benefits or tax deficiencies are recognized as a discrete tax benefit or discrete tax expense to the current income tax provision in Teradyne’s consolidated statements of operations, all excess tax benefits related to share-based payments are reported as cash flows from operating activities, and all cash payments made to taxing authorities on the employees’ behalf for withheld shares are presented as financing activities on the statement of cash flows.

Income Taxes
Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The measurement of deferred tax assets is reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized. Teradyne performed the required assessment of positive and negative evidence regarding the realization of the net deferred tax assets in accordance with ASC 740, “Accounting for Income Taxes.” This assessment included the evaluation of scheduled reversals of deferred tax liabilities, estimates of projected future taxable income and tax-planning strategies. Although realization is not assured, based on its assessment, Teradyne concluded that it is more likely than not that such assets, net of the existing valuation allowance, will be realized.

Advertising Costs
Teradyne expenses all advertising costs as incurred. Advertising costs were $ 12.1 million, $ 16.1 million and $ 15.5 million in 2025, 2024 and 2023 , respectively.

Translation of Non-U.S. Currencies
The functional currency for all non-U.S. subsidiaries is the U.S. dollar, except for Robotics for which the local currency is its functional currency. All foreign currency denominated monetary assets and liabilities are remeasured on a monthly basis into the functional currency using exchange rates in effect at the end of the period. All foreign currency denominated non-monetary assets and liabilities are remeasured into the functional currency using historical exchange rates. Net foreign exchange gains and losses resulting from remeasurement are included in other (income) expense, net. For Robotics, assets and liabilities are translated into U.S. dollars using exchange rates in effect at the end of the period. Revenues and expense amounts are translated using an average of exchange rates in effect during the period. Translation adjustments are recorded within accumulated other comprehensive income (loss) on the balance sheet.
Net foreign exchange gains and losses resulting from remeasurement are included in other (income) expense, net. For the years ended December 31, 2025, 2024 and 2023, losses (gains) from the remeasurement of the monetary assets and liabilities denominated in foreign currencies were $ 9.5 million, $ 2.8 million, and $ 10.9 million, respectively.

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These amounts do not reflect the corresponding (gains) losses from foreign exchange contracts. See Note J: “Financial Instruments” regarding foreign exchange contracts.

Net Income per Common Share
Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Except where the result would be anti-dilutive, diluted net income per common share is calculated by dividing net income by the sum of the weighted average number of common shares plus common stock equivalents, if applicable.

Comprehensive Income
Comprehensive income includes net income, unrealized pension and postretirement prior service costs and benefits, unrealized gains and losses on investments in debt marketable securities, unrealized gains and losses on cash flow hedge and foreign currency translation adjustment.

C. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09 – “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires expanded disclosures relating to the tax rate reconciliation, income taxes paid, income (loss) before income tax expense (benefit) and income tax expense (benefit), requiring a greater disaggregation of information for each. The provisions of ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. Teradyne adopted this guidance on a prospective basis and included the required disclosures in Note U: “Income Taxes.” This ASU has no impact on the results of operations, cash flows, or financial condition.
In November 2024, the FASB issued ASU 2024-03 – “Income Statement - Reporting Comprehensive Income -Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” , which requires disclosure of additional expense information on an annual and interim basis, including the amounts of inventory purchases, employee compensation, depreciation and intangible amortization included within each income statement expense caption. This standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. Teradyne is currently evaluating the impact of this new standard.
In July 2025, the FASB issued ASU 2025-05 – “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets , ” which introduces a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. The practical expedient permits all entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. This standard is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. Teradyne is currently evaluating the impact of this new standard and does not expect a material impact on its financial statements and related disclosures .

D . ACQUISITIONS
Quantifi Photonics
On May 31, 2025 , Teradyne acquired all of the issued and outstanding shares of Quantifi Photonics (“Quantifi”), a privately held company in New Zealand and a leader in photonic integrated circuit (“PIC”) test solutions for a total purchase price of $ 127.2 million. The acquisition of Quantifi enables Teradyne to deliver scalable PIC test solutions. Teradyne's allocation of the purchase price was goodwill of $ 83.1 million, which is not deductible for tax purposes, acquired intangible assets of $ 43.6 million with a weighted average estimated useful life of 10.0 years, and $ 0.6 million of net tangible assets. The goodwill is attributable to cost synergies, assembled workforce and anticipated incremental revenue streams. The fair values of the tangible and identifiable intangible assets acquired and liabilities assumed are based on management's estimates and assumptions. The results of Quantifi have been included in Teradyne's Product Test segment from the date of acquisition.

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The total purchase price was allocated as follows:

 

 

Purchase Price Allocation

 

 

 

(in thousands)

 

Goodwill

 

$

83,068

 

Intangible Assets

 

 

43,600

 

Tangible assets acquired and liabilities assumed:

 

 

 

Current assets

 

 

6,148

 

Long-term deferred tax assets

 

 

6,271

 

Other non-current assets

 

 

2,516

 

Accounts payable and current liabilities

 

 

( 1,609

)

Long-term deferred tax liabilities

 

 

( 12,208

)

Other long-term liabilities

 

 

( 548

)

Total purchase price

 

$

127,238

 

Teradyne estimated the fair value of intangible assets using the income and cost approaches. The fair value of Developed technology was estimated using the Multi-Period Excess Earnings Method. Acquired intangible assets are amortized on a straight-line basis over their estimated useful lives. Components of these intangible assets and their estimated useful lives at the acquisition date are as follows:
 

 

 

Fair Value

 

 

Estimated Useful Life

 

 

 

(in thousands)

 

 

(in years)

 

Developed technology

 

$

38,600

 

 

 

10.0

 

Trademarks and tradenames

 

 

4,400

 

 

 

10.0

 

Customer relationships

 

 

600

 

 

 

8.0

 

Total Intangible Assets

 

$

43,600

 

 

 

10.0

 

Teradyne has not separately disclosed Quantifi's standalone contribution to total company revenue or income from operations before income taxes or pro forma financial information because the impact of the acquisition on the condensed consolidated financial statements is not material.
Automated Test Equipment Technology
On January 31, 2025 , Teradyne acquired from Infineon Technologies AG (“Infineon”) its automated test equipment technology and associated development team (“AET”) based in Regensburg, Germany for a total purchase price of 17.6 million Euros, equivalent to $ 18.3 million, subject to customary adjustments. AET adds resources and expertise to Teradyne and strengthens the relationship between Teradyne and Infineon. The AET acquisition was accounted for as a business combination and, accordingly, the results have been included in Teradyne's Semiconductor Test segment from the date of acquisition. As of the acquisition date, Teradyne's purchase price allocation was goodwill of $ 1.3 million for expected synergies from combining operations, acquired intangible assets of $ 6.4 million, consisting of developed technology and customer relationships, with a weighted average estimated useful life of 4.6 years, and $ 10.7 million of net tangible assets, including $ 11.7 million of inventory. The fair values of the tangible and identifiable intangible assets acquired and liabilities assumed are based on management's estimates and assumptions. The acquisition was not material to Teradyne's condensed consolidated financial statements.

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E. REVENUE
Disaggregation of Revenue
The following table provides information about disaggregated revenue by timing of revenue recognition, primary geographical market, and major product lines.

 

 

Semiconductor
Test

 

 

Robotics

 

 

Product Test

 

 

Total

 

 

 

System-on-a-chip

 

 

Memory

 

 

IST

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

For the Year Ended December 31, 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timing of Revenue Recognition

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Point in Time

 

$

1,604,419

 

 

$

468,345

 

 

$

108,852

 

 

$

300,083

 

 

$

282,252

 

 

$

2,763,951

 

Over Time

 

 

285,266

 

 

 

36,558

 

 

 

20,304

 

 

$

8,212

 

 

 

75,733

 

 

 

426,073

 

Total

 

$

1,889,685

 

 

$

504,903

 

 

$

129,156

 

 

$

308,295

 

 

$

357,985

 

 

$

3,190,024

 

Geographical Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

 

$

1,743,549

 

 

$

497,714

 

 

$

124,426

 

 

$

59,883

 

 

$

114,766

 

 

$

2,540,338

 

Americas

 

 

85,200

 

 

 

4,957

 

 

 

4,730

 

 

$

122,178

 

 

 

208,441

 

 

 

425,506

 

Europe, Middle East and Africa

 

 

60,936

 

 

 

2,232

 

 

 

—

 

 

$

126,234

 

 

 

34,778

 

 

 

224,180

 

Total

 

$

1,889,685

 

 

$

504,903

 

 

$

129,156

 

 

$

308,295

 

 

$

357,985

 

 

$

3,190,024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timing of Revenue Recognition

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Point in Time

 

$

1,255,579

 

 

$

472,279

 

 

$

63,288

 

 

$

356,384

 

 

$

266,955

 

 

$

2,414,485

 

Over Time

 

 

281,545

 

 

 

29,509

 

 

 

21,720

 

 

$

8,464

 

 

 

64,157

 

 

 

405,395

 

Total

 

$

1,537,124

 

 

$

501,788

 

 

$

85,008

 

 

$

364,848

 

 

$

331,112

 

 

$

2,819,880

 

Geographical Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

 

$

1,400,149

 

 

$

466,214

 

 

$

78,719

 

 

$

69,353

 

 

$

113,263

 

 

 

2,127,698

 

Americas

 

 

92,386

 

 

 

15,017

 

 

 

6,289

 

 

$

147,607

 

 

 

174,084

 

 

 

435,383

 

Europe, Middle East and Africa

 

 

44,589

 

 

 

20,557

 

 

 

—

 

 

$

147,888

 

 

 

43,765

 

 

 

256,799

 

Total

 

$

1,537,124

 

 

$

501,788

 

 

$

85,008

 

 

$

364,848

 

 

$

331,112

 

 

$

2,819,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timing of Revenue Recognition

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Point in Time

 

$

1,141,882

 

 

$

356,417

 

 

$

115,220

 

 

$

363,238

 

 

$

282,558

 

 

$

2,259,315

 

Over Time

 

 

290,739

 

 

 

29,598

 

 

 

23,332

 

 

$

11,945

 

 

 

61,369

 

 

 

416,983

 

Total

 

$

1,432,621

 

 

$

386,015

 

 

$

138,552

 

 

$

375,183

 

 

$

343,927

 

 

$

2,676,298

 

Geographical Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

 

$

1,214,322

 

 

$

366,151

 

 

$

135,502

 

 

$

73,736

 

 

$

103,300

 

 

$

1,893,011

 

Americas

 

 

117,728

 

 

 

11,367

 

 

 

3,050

 

 

$

147,952

 

 

 

199,299

 

 

 

479,396

 

Europe, Middle East and Africa

 

 

100,571

 

 

 

8,497

 

 

 

—

 

 

$

153,495

 

 

 

41,328

 

 

 

303,891

 

Total

 

$

1,432,621

 

 

$

386,015

 

 

$

138,552

 

 

$

375,183

 

 

$

343,927

 

 

$

2,676,298

 

Contract Balances

For the years ended December 31, 2025, 2024 and 2023, Teradyne recognized $ 81.6 million, $ 72.7 million and $ 108.1 million , respectively, that was included within the deferred revenue and customer advances balances at the beginning of the period. This revenue primarily relates to undelivered hardware, extended warranties, training, application support, and post contract support. Each of these represents a distinct performance obligation. As of December 31, 2025, Teradyne had $ 100.8 million of unsatisfied performance obligations with an original duration greater than one year, of which 51 % is e xpected to be recognized as revenue within the next 12 months .
F. DISPOSITIONS
On May 27, 2024, Teradyne completed the sale of the Device Interface Solutions (“DIS”) business, a component of the Semiconductor Test segment, to Technoprobe S.p.A. (“Technoprobe”) for $ 85.0 million in cash, net of cash and cash equivalents sold, and a customary working capital adjustment. The sale resulted in a pre-tax gain of $ 57.1 million recorded as 'Gain on sale of business' in the consolidated statement of operations. The transaction did not meet the criteria to be classified as a discontinued operation, as it did not represent a strategic shift that will have a major effect on operations and financial results.

 

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G. EQUITY METHOD INVESTMENT
On May 27, 2024, Teradyne paid 483.1 million Euros, equivalent to $ 524.1 million, to purchase a combination of previously issued and outstanding shares and shares newly issued by Technoprobe, S.p.A. (“Technoprobe”). The shares purchased represent 10 % of the issued and outstanding shares of Technoprobe. Teradyne also received a board seat as part of the purchase. Teradyne accounts for this investment using the equity method as a result of being able to exercise significant influence over the operating and financial decisions of Technoprobe.
The carrying value of this equity method investment as of December 31, 2025, and December 31, 2024, was $ 537.1 million and $ 494.5 million, respectively, in the condensed consolidated balance sheets. For the year ended December 31, 2025, Teradyne recorded a $ 19.9 million loss related to equity in net earnings of affiliate and an income of $ 62.5 million of other comprehensive income (loss) related to the equity method investment. For the year ended December 31, 2024, Teradyne recorded a loss of $ 7.2 million of equity in net earnings of affiliate and a loss of $ 22.4 million in other comprehensive income (loss) related this investment.
 
Based on the quoted closing price of Technoprobe stock as of December 31, 2025, and December 31, 2024, the fair value of the publicly traded investment was $ 935.7 million and $ 389.5 million, respectively.
Teradyne's equity method basis difference was calculated as the difference between the investment and the amount of underlying equity in net assets acquired. The basis differences, net of tax, will be amortized over their estimated useful lives.
Teradyne made an accounting policy election to report its share of Technoprobe's results on a 3-month lag, which is applied consistently from period to period. Teradyne records its share of Technoprobe's net income or loss and the amortization of equity method basis difference, as 'Equity in net earnings of affiliate' in the consolidated statements of operations. Teradyne includes its share of Technoprobe's other comprehensive income and a cumulative translation adjustment in the consolidated statements of comprehensive income.

H. INVENTORIES
Inventories, net consisted of the following at December 31, 2025, and 2024:
 

 

 

2025

 

 

2024

 

 

 

(in thousands)

 

Raw material

 

$

267,566

 

 

$

225,915

 

Work-in-process

 

 

47,876

 

 

 

41,964

 

Finished goods

 

 

64,110

 

 

 

30,613

 

 

 

$

379,552

 

 

$

298,492

 

 

Inventory reserves at December 31, 2025, and December 31, 2024, were $ 151.8 million and $ 141.4 million, respectively .
I. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net consisted of the following at December 31, 2025, and 2024:
 

 

 

2025

 

 

2024

 

 

 

(in thousands)

 

Land

 

$

19,569

 

 

$

19,409

 

Buildings

 

 

220,920

 

 

 

183,371

 

Machinery, equipment and software

 

 

1,257,472

 

 

 

1,157,784

 

Furniture and fixtures

 

 

30,884

 

 

 

28,432

 

Leasehold improvements

 

 

64,597

 

 

 

67,387

 

Construction in progress

 

 

18,527

 

 

 

5,678

 

 

 

1,611,969

 

 

 

1,462,061

 

Less: accumulated depreciation

 

 

1,048,970

 

 

 

953,890

 

 

$

562,999

 

 

$

508,171

 

 
Depreciation of property, plant and equipment for the years ended December 31, 2025, 2024, and 2023, was $ 111.4 million, $ 101.0 million, and $ 92.1 million, respectively. As of December 31, 2025, and 2024, the gross book value included in machinery and

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equipment for internally manufactured test systems being leased by customers was $ 35.1 million and $ 25.7 million, respectively. As of December 31, 2025, and 2024, the accumulated depreciation on these test systems was $ 9.2 million and $ 5.5 million, respectively.

J . FINANCIAL INSTRUMENTS
Cash Equivalents
Teradyne considers all highly liquid investments with original maturities of three months or less at the date of acquisition to be cash equivalents.
Marketable Securities
Teradyne’s equity and debt mutual funds are classified as Level 1 and available-for-sale debt securities are classified as Level 2. The vast majority of Level 2 securities are fixed income securities priced by third party pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available, use other observable inputs like market transactions involving identical or comparable securities.
During the years ended December 31, 2025, and 2024, there were no transfers in or out of Level 1, Level 2, or Level 3 financial instruments.

 

 

December 31, 2025

 

 

December 31, 2024

 

 

December 31, 2023

 

 

 

(in millions)

 

Realized gains and losses included in 'Other (income) expense, net' in the condensed consolidated statement of operations

 

 

 

 

 

 

 

 

 

Realized gains

 

$

3.9

 

 

$

2.2

 

 

$

0.6

 

Realized losses

 

 

1.4

 

 

 

0.3

 

 

 

0.3

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on equity securities included in 'Other (income) expense, net' in the condensed consolidated statement of operations

 

 

 

 

 

 

 

 

 

Unrealized gains on equity securities

 

 

8.4

 

 

 

6.7

 

 

 

8.9

 

Unrealized losses on equity securities

 

 

3.8

 

 

 

1.2

 

 

 

1.7

 

Unrealized gains and losses on available-for-sale debt securities are included in 'Accumulated other comprehensive income (loss)' in the condensed consolidated balance sheet.
The cost of securities sold is based on average cost.

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The following table sets forth by fair value hierarchy Teradyne’s financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2025, and 2024 :

 

 

 

December 31, 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

 

$

214,712

 

 

$

—

 

 

$

—

 

 

$

214,712

 

Cash equivalents

 

 

78,068

 

 

 

971

 

 

 

—

 

 

 

79,039

 

Available for sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

 

—

 

 

 

44,143

 

 

 

—

 

 

 

44,143

 

Corporate debt securities

 

 

—

 

 

 

36,384

 

 

 

—

 

 

 

36,384

 

Debt mutual funds

 

 

14,331

 

 

 

—

 

 

 

—

 

 

 

14,331

 

Certificates of deposit and time deposits

 

 

—

 

 

 

1,354

 

 

 

—

 

 

 

1,354

 

Non-U.S. government securities

 

 

—

 

 

 

924

 

 

 

—

 

 

 

924

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

Mutual funds

 

 

57,367

 

 

 

—

 

 

 

—

 

 

 

57,367

 

Total

 

$

364,478

 

 

$

83,776

 

 

$

—

 

 

$

448,254

 

Derivative assets

 

 

—

 

 

 

1,175

 

 

 

—

 

 

 

1,175

 

Total

 

$

364,478

 

 

$

84,951

 

 

$

—

 

 

$

449,429

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

 

—

 

 

 

928

 

 

 

—

 

 

 

928

 

Total

 

$

—

 

 

$

928

 

 

$

—

 

 

$

928

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Total

 

 

 

(in thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

292,780

 

 

$

971

 

 

$

—

 

 

$

293,751

 

Long-term marketable securities

 

 

71,698

 

 

 

54,558

 

 

 

—

 

 

 

126,256

 

Marketable securities

 

 

—

 

 

 

28,247

 

 

 

—

 

 

 

28,247

 

Other current assets

 

 

—

 

 

 

1,175

 

 

 

—

 

 

 

1,175

 

Total

 

$

364,478

 

 

$

84,951

 

 

$

—

 

 

$

449,429

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Other current liabilities

 

$

—

 

 

$

928

 

 

$

—

 

 

$

928

 

Total

 

$

—

 

 

$

928

 

 

$

—

 

 

$

928

 

 

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December 31, 2024

 

 

 

Quoted Prices
in Active
Markets for
Identical
Instruments
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

 

Total

 

 

 

(in thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

261,176

 

 

$

—

 

 

$

—

 

 

$

261,176

 

Cash equivalents

 

 

283,037

 

 

 

9,141

 

 

 

—

 

 

 

292,178

 

Available for sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

 

—

 

 

 

44,942

 

 

 

—

 

 

 

44,942

 

Corporate debt securities

 

 

—

 

 

 

35,696

 

 

 

—

 

 

 

35,696

 

Certificates of deposit and time deposits

 

 

—

 

 

 

21,689

 

 

 

—

 

 

 

21,689

 

Debt mutual funds

 

 

8,951

 

 

 

—

 

 

 

—

 

 

 

8,951

 

U.S. government agency securities

 

 

—

 

 

 

3,970

 

 

 

—

 

 

 

3,970

 

Non-U.S. government securities

 

 

—

 

 

 

773

 

 

 

—

 

 

 

773

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

Mutual funds

 

 

54,412

 

 

 

—

 

 

 

—

 

 

 

54,412

 

Total

 

$

607,576

 

 

$

116,211

 

 

$

—

 

 

$

723,787

 

Derivative assets

 

 

—

 

 

 

1,665

 

 

 

—

 

 

 

1,665

 

Total

 

$

607,576

 

 

$

117,876

 

 

$

—

 

 

$

725,452

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

 

—

 

 

 

1,324

 

 

 

—

 

 

 

1,324

 

Total

 

$

—

 

 

$

1,324

 

 

$

—

 

 

$

1,324

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Total

 

 

 

(in thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

544,213

 

 

$

9,141

 

 

$

—

 

 

$

553,354

 

Marketable securities

 

 

—

 

 

 

46,312

 

 

 

—

 

 

 

46,312

 

Long-term marketable securities

 

 

63,363

 

 

 

60,758

 

 

 

—

 

 

 

124,121

 

Other current assets

 

 

—

 

 

 

1,665

 

 

 

—

 

 

 

1,665

 

Total

 

$

607,576

 

 

$

117,876

 

 

$

—

 

 

$

725,452

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Other current liabilities

 

$

—

 

 

$

1,324

 

 

$

—

 

 

$

1,324

 

Total

 

$

—

 

 

$

1,324

 

 

$

—

 

 

$

1,324

 

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

 

 

December 31, 2025

 

 

December 31, 2024

 

 

 

Carrying Value

 

 

Fair Value

 

 

Carrying Value

 

 

Fair Value

 

 

 

(in thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

293,751

 

 

$

293,751

 

 

$

553,354

 

 

$

553,354

 

Marketable securities

 

 

154,503

 

 

 

154,503

 

 

 

170,433

 

 

 

170,433

 

Derivative assets

 

 

1,175

 

 

 

1,175

 

 

 

1,665

 

 

 

1,665

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities

 

 

928

 

 

 

928

 

 

 

1,324

 

 

 

1,324

 

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

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The following tables summarize the composition of available-for-sale marketable securities at December 31, 2025, and 2024:
 

 

 

December 31, 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

 

$

48,723

 

 

$

90

 

 

$

( 4,670

)

 

$

44,143

 

 

$

13,891

 

Corporate debt securities

 

 

40,090

 

 

 

293

 

 

 

( 3,999

)

 

 

36,384

 

 

 

22,941

 

 Debt mutual funds

 

 

14,508

 

 

 

—

 

 

 

( 177

)

 

 

14,331

 

 

 

3,020

 

Certificates of deposit and time deposits

 

 

1,354

 

 

 

—

 

 

 

—

 

 

 

1,354

 

 

 

—

 

 Non-U.S. government securities

 

 

924

 

 

 

—

 

 

 

—

 

 

 

924

 

 

 

—

 

 

 

$

105,599

 

 

$

383

 

 

$

( 8,846

)

 

$

97,136

 

 

$

39,852

 

 
Reported as follows:
 

 

 

Cost

 

 

Unrealized
Gain

 

 

Unrealized
(Loss)

 

 

Fair Market
Value

 

 

Fair Market
Value of Investments
with Unrealized Losses

 

 

 

(in thousands)

 

Marketable securities

 

$

28,213

 

 

$

41

 

 

$

( 7

)

 

$

28,247

 

 

$

2,293

 

Long-term marketable securities

 

 

77,386

 

 

 

342

 

 

 

( 8,839

)

 

$

68,889

 

 

 

37,559

 

 

$

105,599

 

 

$

383

 

 

$

( 8,846

)

 

$

97,136

 

 

$

39,852

 

 

 

 

December 31, 2024

 

 

 

Available-for-Sale

 

 

 

Cost

 

 

Unrealized
Gain

 

 

Unrealized
(Loss)

 

 

Fair Market
Value

 

 

Fair Market
Value of Investments
with Unrealized Losses

 

 

 

(in thousands)

 

U.S. Treasury securities

 

$

49,879

 

 

$

14

 

 

$

( 4,951

)

 

$

44,942

 

 

$

30,530

 

Corporate debt securities

 

 

40,395

 

 

 

79

 

 

 

( 4,778

)

 

 

35,696

 

 

 

27,824

 

Certificates of deposit and time deposits

 

 

21,689

 

 

 

—

 

 

 

—

 

 

 

21,689

 

 

 

—

 

Debt mutual funds

 

 

9,299

 

 

 

—

 

 

 

( 348

)

 

 

8,951

 

 

 

3,238

 

U.S. government agency securities

 

 

3,966

 

 

 

5

 

 

 

( 1

)

 

 

3,970

 

 

 

1,946

 

Non-U.S. government securities

 

 

773

 

 

 

—

 

 

 

—

 

 

 

773

 

 

 

—

 

 

 

$

126,001

 

 

$

98

 

 

$

( 10,078

)

 

$

116,021

 

 

$

63,538

 

 
Reported as follows:
 

 

 

Cost

 

 

Unrealized
Gain

 

 

Unrealized
(Loss)

 

 

Fair Market
Value

 

 

Fair Market
Value of Investments
with Unrealized Losses

 

 

 

(in thousands)

 

Marketable securities

 

$

46,349

 

 

$

16

 

 

$

( 53

)

 

$

46,312

 

 

$

10,454

 

Long-term marketable securities

 

 

79,652

 

 

 

82

 

 

 

( 10,025

)

 

$

69,709

 

 

 

53,084

 

 

$

126,001

 

 

$

98

 

 

$

( 10,078

)

 

$

116,021

 

 

$

63,538

 

 
As of December 31, 2025, the fair market value of investments with unrealized losses less than one year and greater than one year totaled $ 1.1 million and $ 38.8 million, respectively. As of December 31, 2024, the fair market value of investments with unrealized losses less than one year and greater than one year totaled $ 22.6 million and $ 40.9 million, respectively.
Teradyne reviews its investments to identify and evaluate investments that have an indication of possible impairment. Based on this review, Teradyne determined that the unrealized losses related to these investments at December 31, 2025, and 2024 were not other than temporary.

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The contractual maturities of investments in available-for-sale marketable securities held at December 31, 2025, were as follows:
 

 

 

Cost

 

 

Fair Value

 

 

 

(in thousands)

 

Due within one year

 

$

28,213

 

 

$

28,247

 

Due after 1 year through 5 years

 

 

18,693

 

 

 

18,602

 

Due after 5 years through 10 years

 

 

9,285

 

 

 

9,406

 

Due after 10 years

 

 

34,900

 

 

 

26,550

 

Total

 

$

91,091

 

 

$

82,805

 

 
Contractual maturities of investments in available-for-sale marketable securities held at December 31, 2025, exclude debt mutual funds with the fair market value of $ 14.3 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 December 31, 2025, and 2024, to hedge certain of its local currency balance sheet assets and liabilities, Teradyne had the following contracts to buy and sell non-U.S. currencies for U.S. dollars and other non-U.S. currencies with the following notional amounts:
 

 

 

Net Notional Value

 

 

 

December 31, 2025

 

 

December 31, 2024

 

 

 

(in millions)

 

Currency Hedged (Buy/Sell)

 

 

 

 

 

 

U.S. dollar/Taiwan dollar

 

$

27.0

 

 

$

14.5

 

U.S. dollar/Japanese yen

 

 

16.9

 

 

 

12.6

 

U.S. dollar/Korean won

 

 

7.7

 

 

 

4.2

 

U.S. dollar/British pound sterling

 

 

1.9

 

 

 

1.2

 

Singapore dollar/U.S. dollar

 

 

62.6

 

 

 

28.9

 

Euro/U.S. dollar

 

 

20.4

 

 

 

22.3

 

Philippine peso/U.S. dollar

 

 

1.8

 

 

 

9.4

 

Chinese yuan/U.S. dollar

 

 

0.7

 

 

 

1.6

 

Danish krone/U.S. dollar

 

 

—

 

 

 

16.9

 

Danish krone/Chinese yuan

 

 

—

 

 

 

10.5

 

Total

 

$

139.0

 

 

$

122.1

 

 

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The change in the fair value of the outstanding contracts was a gain of $ 0.2 million and a loss of $ 0.6 million, respectively, at December 31, 2025, and 2024.
Unrealized gains and losses on foreign currency forward contracts and foreign currency remeasurement gains and losses on monetary assets and liabilities are included in other (income) expense, net.
At December 31, 2025, and 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

 

 

 

December 31, 2025

 

 

December 31, 2024

 

 

 

(in millions)

 

Currency Hedged (Buy/Sell)

 

 

 

 

 

 

U.S. dollar/Japanese yen

 

$

—

 

 

$

15.6

 

Total

 

$

—

 

 

$

15.6

 

 

The fair value of the outstanding cash flow hedge contracts was a gain of $ 0.9 million at December 31, 2024.
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 year ended December 31, 2025, a realized gain of $ 0.6 million was recorded in Other (income) expense, net, in the consolidated statement of operations.
On November 7, 2023, in connection with the agreement to acquire 10 % investment in Technoprobe S.p.A, Teradyne purchased a call option to buy 481.0 million Euros. The expiration date of the option was April 26, 2024 . On April 12, 2024, Teradyne entered into a forward to buy 481.0 million Euros which expired on May 23, 2024 . For the year ended December 31, 2024, a realized loss of $ 9.8 million was recorded in 'Other (income) expense, net' in the consolidated statement of operations.
T he following table summarizes the fair value of derivative instruments as of December 31, 2025, and 2024:
 

 

 

Balance Sheet Location

 

December 31,
2025

 

 

December 31,
2024

 

 

 

 

 

(in thousands)

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

Other current assets

 

$

1,175

 

 

$

725

 

Foreign exchange forward contracts

 

Other current liabilities

 

 

( 928

)

 

 

( 1,324

)

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

Other current assets

 

 

—

 

 

 

940

 

Total derivatives

 

 

 

$

247

 

 

$

341

 

 

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The following table summarizes the effect of derivative instruments in the statements of operations recognized for the years ended December 31, 2025, 2024, and 2023:
 

 

 

Location of (Gains) Losses
Recognized in Statement
of Operations

 

December 31,
2025

 

 

December 31,
2024

 

 

December 31,
2023

 

 

 

 

 

(in thousands)

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward contracts (1)

 

Other (income) expense, net

 

$

217

 

 

$

3,226

 

 

$

( 1,843

)

Foreign exchange option contracts

 

Other (income) expense, net

 

 

( 561

)

 

 

9,764

 

 

 

( 7,464

)

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward and option contracts

 

Revenue

 

 

( 449

)

 

 

( 2,402

)

 

 

( 3,127

)

Total derivatives

 

 

 

$

( 793

)

 

$

10,588

 

 

$

( 12,434

)

(1) The table does not reflect the corresponding gains and losses from the remeasurement of the monetary assets and liabilities denominated in foreign currencies. For the years ended December 31, 2025, 2024 and 2023, net losses from remeasurement of monetary assets and liabilities denominated in foreign currencies were $ 9.5 million, $ 2.8 million, and $ 10.9 million, respectively.

See Note L: “Debt” regarding derivatives related to the convertible senior notes.
Concentration of Credit Risk
Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash equivalents, marketable securities, forward currency contracts and accounts receivable. Our cash equivalents consist primarily of money market funds invested in U.S. Treasuries and government agencies. Our fixed income available-for-sale marketable securities have a minimum rating of AA by one or more of the major credit rating agencies. Teradyne places forward currency contracts with high credit-quality financial institutions in order to minimize credit risk exposure. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of geographically dispersed customers. Teradyne performs ongoing credit evaluations of our customers’ financial condition and from time to time may require customers to provide a letter of credit from a bank to secure accounts receivable. As of December 31, 2025, two customers of primarily our Semiconductor Test segment accounted for approximately 22 % and 20 %, respectively, of our accounts receivable balance. As of December 31, 2024, two customers of our Semiconductor Test segment each accounted for 10 % of our accounts receivable balance.

K. LEASES
Teradyne has facility and auto leases, which are accounted for as operating leases. Teradyne’s facility leases are primarily used for administrative functions, research and development, manufacturing, and storage and distribution. Remaining lease terms range from less than one year to ten years.
For the years ended December 31, 2025, 2024 and 2023, total lease expense was $ 40.6 million, $ 43.6 million, and $ 42.7 million, respectively, and included $ 14.9 million, $ 15.9 million, and $ 15.5 million, respectively, of variable lease costs and $ 1.5 million, $ 1.3 million, and $ 1.3 million, respectively, of costs related to short-term leases, which are not recorded on the consolidated balance sheets.
At December 31, 2025, the weighted average remaining lease term and weighted average discount rate for operating leases was 6.9 years and 5.3 % , respectively. At December 31, 2024, the weighted average remaining lease term and weighted average discount rate for operating leases was 5.8 years and 5.5 % , respectively.

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Supplemental cash flows information related to leases was as follows:
 

 

 

For the Years Ended

 

 

 

December 31,
2025

 

 

December 31,
2024

 

 

December 31,
2023

 

 

 

(in thousands)

 

Cash paid for amounts included in the measurement of lease
    liabilities included in operating cash flows

 

$

24,609

 

 

$

23,990

 

 

$

26,059

 

Right-of-use assets obtained in exchange for new lease obligations

 

 

69,227

 

 

 

18,358

 

 

 

17,987

 

 
Maturities of lease liabilities as of December 31, 2025, were as follows:
 

 

 

Operating Lease

 

 

 

(in thousands)

 

2026

 

$

22,710

 

2027

 

 

18,535

 

2028

 

 

12,415

 

2029

 

 

9,628

 

2030

 

 

8,106

 

Thereafter

 

 

29,793

 

     Total lease payments

 

 

101,187

 

Less imputed interest

 

 

( 17,948

)

     Total lease liabilities

 

$

83,239

 

 
L. DEBT
Revolving Credit Facility
On May 1, 2020, Teradyne entered into a credit agreement (the “Credit Agreement”) with Truist Bank, as administrative agent and collateral agent, and the lenders party thereto. The Credit Agreement provides for a three-year , senior secured revolving credit facility of $ 400.0 million (the “Credit Facility”).
On December 10, 2021, the Credit Agreement was amended to extend the maturity date of the Credit Facility to December 10, 2026. On October 5, 2022, the Credit Agreement was amended to increase the amount of the Credit Facility to $ 750.0 million from $ 400.0 million. On November 7, 2023, the Credit Agreement was amended to allow for the purchase of the shares of Technoprobe.
The Credit Agreement provides that, subject to customary conditions, Teradyne may seek to obtain from existing or new lenders the available incremental amount under the Credit Facility, not to exceed the greater of $ 200.0 million or 15 % of consolidated EBIDTA. The interest rate applicable to loans under the Credit Facility are, at Teradyne’s option, equal to either a base rate plus a margin ranging from 0.00 % to 0.75 % per annum or SOFR plus a margin ranging from 1.10 % to 1.85 % per annum, based on the consolidated leverage ratio of Teradyne. In addition, Teradyne will pay a commitment fee on the unused portion of the commitments under the Credit Facility ranging from 0.15 % to 0.25 % per annum, based on the then applicable consolidated leverage ratio.
Teradyne is not required to repay any loans under the Credit Facility prior to maturity, subject to certain customary exceptions. Teradyne is permitted to prepay all or any portion of the loans under the Credit Facility prior to maturity without premium or penalty, other than customary SOFR breakage costs.
The Credit Agreement contains customary events of default, representations, warranties and affirmative and negative covenants that, among other things, limit Teradyne’s ability to sell assets, grant liens on assets, incur other secured indebtedness and make certain investments and restricted payments, all subject to exceptions set forth in the Credit Agreement. The Credit Agreement also requires Teradyne to satisfy two financial ratios measured as of the end of each fiscal quarter; a consolidated leverage ratio and an interest coverage ratio.
The Credit Facility is guaranteed by certain of Teradyne’s domestic subsidiaries and collateralized by assets of Teradyne and such subsidiaries, including a pledge of 65 % of the capital stock of certain foreign subsidiaries.

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On September 4, 2025, September 19, 2025 and October 7, 2025, Teradyne borrowed a combined $ 250.0 million under the Credit Agreement to support the upcoming ramp-up in manufacturing capacity for Semiconductor Test and the strategy to return cash to shareholders through share repurchases, dividends, and inorganic growth opportunities. On December 31, 2025 , Teradyne repaid $ 50.0 million of its borrowings under the Credit Facility, reducing the outstanding balance to $ 200.0 million as of year-end. The average interest rate on the borrowings outstanding is 4.86 % . Teradyne has paid $ 3.2 million in interest related to its debt from the Credit Facility.
On May 16, 2024, Teradyne borrowed $ 185.0 million under the Credit Agreement to support the acquisition of 10 % of the issued and outstanding shares of Technoprobe. Teradyne fully repaid its borrowings under the Credit Facility prior to December 31, 2024, and t here was no outstanding revolver balance as of December 31, 2024.
As of February 19, 2026, Teradyne was in compliance with all covenants under the Credit Agreement.
Convertible Senior Notes
On December 12, 2016, Teradyne completed a private offering of $ 460.0 million aggregate principal amount of 1.25 % convertible senior unsecured notes (the “Notes”) and received net proceeds, after issuance costs, of approximately $ 450.8 million, $ 33.0 million of which was used to pay the net cost of the convertible note hedge transactions and $ 50.1 million of which was used to repurchase 2.0 million shares of Teradyne’s common stock under its existing stock repurchase program from purchasers of the Notes in privately negotiated transactions effected through one of the initial purchasers or its affiliates conducted concurrently with the pricing of the Note offering. The Notes bore interest at a rate of 1.25 % per year payable semiannually in arrears on June 15 and December 15 of each year . The notes matured on December 15, 2023 .
Concurrent with the offering of the Notes, Teradyne entered into convertible note hedge transactions (the “Note Hedge Transactions”) with the initial purchasers or their affiliates (the “Option Counterparties”). The Note Hedge Transactions cover, subject to customary anti-dilution adjustments, the number of shares of the common stock that underlie the Notes. Separately and concurrent with the pricing of the Notes, Teradyne entered into warrant transactions with the Option Counterparties (the “Warrant Transactions”) in which it sold net-share-settled (or, at its election subject to certain conditions, cash-settled) warrants to the Option Counterparties. The Warrant Transactions, which began expiring on March 18, 2024 , and continued to expire through July 10, 2024 , covered, subject to customary anti-dilution adjustments, approximately 1.3 million shares of common stock. During the year ended December 31, 2024 , 14.7 million warrants expired, resulting in the issuance of 10.0 million shares of Teradyne common stock, respectively. As of the final date of expiration, July 10, 2024, the strike price of the warrants was approximately $ 39.35 per share. The Warrant Transactions resulted in additional shares of Teradyne’s common stock being issued to the extent that the market price per share of Teradyne’s common stock, as measured under the terms of the Warrant Transactions, exceeded the applicable strike price of the warrants.
The interest expense on Teradyne's senior notes for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, was as follows:

 

 

For the Years Ended

 

 

 

December 31, 2025

 

 

December 31, 2024

 

 

December 31, 2023

 

 

 

(in thousands)

 

Contractual interest expense on the coupon

 

$

—

 

 

$

—

 

 

$

312

 

Amortization of the issuance fees recognized as interest expense

 

 

—

 

 

 

—

 

 

 

113

 

Total interest expense on the convertible debt

 

$

—

 

 

$

—

 

 

$

425

 

 

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M. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Changes in accumulated other comprehensive income (loss), which is presented net of tax, consist of the following:
 

 

 

Foreign
Currency
Translation
Adjustment

 

 

Unrealized
Gains (Losses) on
Marketable
Securities

 

 

Unrealized Gains (Losses) on
Cash Flow Hedges

 

 

Retirement Plans Prior Service Credit

 

 

Total

 

 

 

(in thousands)

 

Balance at December 31, 2023, net of tax of $ 0 , $( 1,728 ),
   $ 143 , $( 1,132 ), respectively

 

$

( 22,442

)

 

$

( 6,194

)

 

$

506

 

 

$

1,152

 

 

$

( 26,978

)

Other comprehensive (loss) gain before reclassifications,
   net of tax of $ 0 , $( 470 ), $ 593 , $ 0 , respectively

 

 

( 52,847

)

 

 

( 1,699

)

 

 

2,100

 

 

 

—

 

 

 

( 52,446

)

Amounts reclassified from accumulated other comprehensive
   income (loss), net of tax of $ 0 , $ 24 , $( 527 ), $( 2 ), respectively

 

 

—

 

 

 

86

 

 

 

( 1,875

)

 

 

( 7

)

 

 

( 1,796

)

Net current period other comprehensive (loss) gain, net of tax
   of $ 0 , $( 446 ), $ 66 , $( 2 ), respectively

 

 

( 52,847

)

 

 

( 1,613

)

 

 

225

 

 

 

( 7

)

 

 

( 54,242

)

Balance at December 31, 2024, net of tax of $ 0 , $( 2,174 ),
   $ 209 , $( 1,134 ), respectively

 

$

( 75,289

)

 

$

( 7,807

)

 

$

731

 

 

$

1,145

 

 

$

( 81,220

)

Other comprehensive (loss) gain before reclassifications,
   net of tax of $ 0 , $ 255 , $( 109 ), $ 0 , respectively

 

 

122,617

 

 

 

1,147

 

 

 

( 381

)

 

 

—

 

 

 

123,383

 

Amounts reclassified from accumulated other comprehensive
   income (loss), net of tax of $ 0 , $ 27 , $( 100 ), $( 2 ), respectively

 

 

—

 

 

 

89

 

 

 

( 350

)

 

 

( 7

)

 

 

( 268

)

Net current period other comprehensive (loss) gain, net of tax
   of $ 0 , $ 282 , $( 209 ), $( 2 ), respectively

 

 

122,617

 

 

 

1,236

 

 

 

( 731

)

 

 

( 7

)

 

 

123,115

 

Balance at December 31, 2025, net of tax of $ 0 , $( 1,892 ),
   $ 0 , $( 1,136 ), respectively

 

$

47,328

 

 

$

( 6,571

)

 

$

—

 

 

$

1,138

 

 

$

41,895

 

 
Reclassifications out of accumulated other comprehensive income (loss) to the statements of operations for the years ended December 31, 2025, 2024, and 2023, were as follows:
 

Details about Accumulate Other Comprehensive Income (Loss) Components

 

For the years ended

 

 

Affected Line Item
in the Statements
of Operations

 

 

December 31,
2025

 

 

December 31,
2024

 

 

December 31,
2023

 

 

 

 

 

(in thousands)

 

 

 

Available-for-sale marketable securities

 

 

 

 

 

 

 

 

 

 

 

Unrealized (losses) gains, net of tax of $( 27 ), ( 24 ), $( 12 ),
   respectively

 

$

( 89

)

 

$

( 86

)

 

$

( 44

)

 

Other (income) expense, net

Cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

Unrealized (losses) gains, net of tax of $ 100 , $ 527 , $ 686 ,
   respectively

 

 

350

 

 

 

1,875

 

 

 

2,441

 

 

Revenue

Defined benefit pension and postretirement plans:

 

 

 

 

 

 

 

 

 

 

 

Amortization of prior service credit, net of tax of $ 2 , $ 2 , $ 2 ,
   respectively

 

 

7

 

 

 

7

 

 

 

7

 

 

(a)

Total reclassifications, net of tax of $ 75 , $ 505 , $ 676 , respectively

 

$

268

 

 

$

1,796

 

 

$

2,404

 

 

Net income

 
(a) The amortization of prior service credit is included in the computation of net periodic pension cost and postretirement benefit; see Note R: “Retirement Plans” .

N. GOODWILL AND INTANGIBLE ASSETS
Goodwill
Teradyne performs its annual goodwill impairment test as required under the provisions of ASC 350-10, “Intangibles—Goodwill and Other” on December 31 of each fiscal year unless there are negative qualitative factors relating to macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, and other relevant events and changes during an interim period. The presence of such factors could, under certain circumstances, be a triggering event that causes the Company to perform a goodwill impairment test. Goodwill is considered impaired when the carrying value of a reporting unit exceeds its estimated fair value.

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At June 29, 2025, the Company identified a triggering event for the Robotics reporting unit and performed an interim impairment test of the related goodwill and long-lived assets, including intangible assets. Based on the analysis performed, Teradyne did not record an impairment.
Teradyne has the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If Teradyne determines this is the case, Teradyne is required to perform a quantitative goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized. In the fourth quarter of 2025, Teradyne performed the annual goodwill impairment test, completing a quantitative assessment for the Robotics reporting unit. Key assumptions used in the goodwill valuation model are projected revenue growth rates, projected earnings before interest, taxes, depreciation, and amortization (“EBITDA”) margins, discount rate, and revenue multiples from comparable companies. In performing the quantitative goodwill impairment test, Teradyne determines the fair value of a reporting unit using the results derived from an income approach and a market approach, equally weighting the fair value determined under each approach to determine an estimated fair value for a reporting unit. The income approach is estimated through the discounted cash flows (“DCF”) analysis. Determining fair value requires the exercise of significant judgment, including judgments about appropriate projected revenue growth rates, projected EBITDA margins, discount rates, and the amount and timing of expected future cash flows. Discount rates are based on a weighted average cost of capital (“WACC”), which represents the average rate a business must pay its providers of debt and equity, plus a risk premium. The cash flows employed in the DCF analysis are derived from internal forecasts and external market forecasts. The market approach estimates the fair value of the reporting unit by utilizing the market comparable method which is based on revenue multiples from comparable companies. Although Teradyne concluded that the fair value of the Robotics reporting unit exceeded the carrying value, future changes in the judgments, assumptions, and estimates that are used in the impairment testing for goodwill, including projected revenue growth rates, projected EBITDA margins, discount rate, and revenue multiples from comparable companies, could result in significantly different estimates of the fair value resulting in the reporting unit being impaired in a future period.
If Teradyne determines that it is more likely than not that the fair value of the reporting unit is greater than its carrying amount, the quantitative goodwill impairment test is not required. At December 31, 2025, Teradyne performed a qualitative assessment for all reporting units other than Robotics. No impairment of any reporting unit was identified as of December 31, 2025.
In the fourth quarter of 2024 , Teradyne performed the annual goodwill impairment test, completing a quantitative assessment for the Robotics reporting unit and a qualitative assessment for the Wireless Test reporting unit and for a reporting unit within System Test reporting units. There was no impairment as a result of the annual test performed in the fourth quarter of 2024. Key assumptions in the goodwill valuation model are forecasted revenues, discount rate, earnings before interest and taxes, and revenue multiples from comparable companies.
The changes in the carrying amount of goodwill by reportable segments for the years ended December 31, 2025, and 2024 are as follows:
 

 

 

Robotics

 

 

Semiconductor
Test

 

 

Product Test

 

 

Total

 

 

 

(in thousands)

 

Balance at December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

395,463

 

 

$

262,237

 

 

$

520,518

 

 

$

1,178,218

 

Accumulated impairment losses

 

 

—

 

 

 

( 260,540

)

 

 

( 502,026

)

 

 

( 762,566

)

Total Goodwill

 

 

395,463

 

 

 

1,697

 

 

 

18,492

 

 

 

415,652

 

Foreign currency translation adjustment

 

 

( 20,165

)

 

 

( 120

)

 

 

—

 

 

 

( 20,285

)

Balance at December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

375,298

 

 

 

262,117

 

 

 

520,518

 

 

 

1,157,933

 

Accumulated impairment losses

 

 

—

 

 

 

( 260,540

)

 

 

( 502,026

)

 

 

( 762,566

)

Total Goodwill

 

 

375,298

 

 

 

1,577

 

 

 

18,492

 

 

 

395,367

 

AET acquisition

 

 

—

 

 

 

1,257

 

 

 

—

 

 

 

1,257

 

Quantifi acquisition

 

 

—

 

 

 

—

 

 

 

83,068

 

 

 

83,068

 

Foreign currency translation adjustment

 

 

41,103

 

 

 

224

 

 

 

—

 

 

 

41,327

 

Balance at December 31, 2025

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

416,401

 

 

 

263,598

 

 

 

603,586

 

 

 

1,283,585

 

Accumulated impairment losses

 

 

—

 

 

 

( 260,540

)

 

 

( 502,026

)

 

 

( 762,566

)

Total Goodwill

 

$

416,401

 

 

$

3,058

 

 

$

101,560

 

 

$

521,019

 

 

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Intangible Assets
Teradyne reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate.
There were no events or circumstances indicating that the carrying value of intangible and long-lived assets may not be recoverable in 2025, 2024 and 2023.
Amortizable intangible assets consist of the following and are included in intangible assets, net on the balance sheets:
 

 

 

December 31, 2025

 

 

 

Gross
Carrying
Amount (1)

 

 

Accumulated
Amortization (1)

 

 

Foreign Currency Translation Adjustment

 

 

Net
Carrying
Amount

 

 

 

(in thousands)

 

Developed technology

 

$

250,025

 

 

$

( 211,662

)

 

$

60

 

 

$

38,423

 

Customer relationships

 

 

56,480

 

 

 

( 51,953

)

 

 

204

 

 

 

4,731

 

Tradenames and trademarks

 

 

40,487

 

 

 

( 31,339

)

 

 

( 1,031

)

 

 

8,117

 

Total intangible assets

 

$

346,992

 

 

$

( 294,954

)

 

$

( 767

)

 

$

51,271

 

 

 

 

December 31, 2024

 

 

 

Gross
Carrying
Amount

 

 

Accumulated
Amortization

 

 

Foreign Currency Translation Adjustment

 

 

Net
Carrying
Amount

 

 

 

(in thousands)

 

Developed technology

 

$

267,706

 

 

$

( 255,448

)

 

$

( 5,820

)

 

$

6,438

 

Customer relationships

 

 

52,109

 

 

 

( 49,562

)

 

 

204

 

 

 

2,751

 

Tradenames and trademarks

 

 

59,007

 

 

 

( 50,805

)

 

 

( 1,464

)

 

 

6,738

 

Total intangible assets

 

$

378,822

 

 

$

( 355,815

)

 

$

( 7,080

)

 

$

15,927

 

 
(1) In 2025 , $ 81.8 million of amortizable intangible assets became fully amortized and have been eliminated from the gross carrying amount and accumulated amortization.

Aggregate intangible assets amortization expense for the years ended December 31, 2025, 2024, and 2023, was $ 15.3 million, $ 18.8 million, and $ 19.0 million, respectively. Estimated intangible assets amortization expense for each of the five succeeding fiscal years is as follows:
 

Year

 

Amortization Expense

 

 

 

(in thousands)

 

2026

 

$

8,208

 

2027

 

 

6,992

 

2028

 

 

6,911

 

2029

 

 

5,552

 

2030

 

 

4,436

 

Thereafter

 

 

19,172

 

 
O. COMMITMENTS AND CONTINGENCIES
Purchase Commitments
As of December 31, 2025, Teradyne had entered into non-cancelable purchase commitments for certain components and materials. The purchase commitments covered by the agreements aggregate to approximately $ 1,473.0 million, of which $ 1,415.1 million is for less than one year.

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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.
Guarantees and Indemnification Obligations
Teradyne provides indemnification, to the extent permitted by law, to its officers, directors, employees and agents for liabilities arising from certain events or occurrences, while the officer, director, employee, or agent, is or was serving, at Teradyne’s request in such capacity. Teradyne may enter into indemnification agreements with certain of its officers and directors. With respect to acquisitions, Teradyne provides indemnifications to or assumes indemnification obligations for the current and former directors, officers and employees of the acquired companies in accordance with the acquired companies’ by-laws and charter. As a matter of practice, Teradyne has maintained directors’ and officers’ liability insurance coverage including coverage for directors and officers of acquired companies.
Teradyne enters into agreements in the ordinary course of business with customers, resellers, distributors, integrators and suppliers. Most of these agreements require Teradyne to defend and/or indemnify the other party against intellectual property infringement claims brought by a third party with respect to Teradyne’s products. From time to time, Teradyne also indemnifies customers and business partners for damages, losses and liabilities they may suffer or incur relating to personal injury, personal property damage, product liability, breach of confidentiality obligations and environmental claims relating to the use of Teradyne’s products and services or resulting from the acts or omissions of Teradyne, its employees, authorized agents or subcontractors. On occasion, Teradyne has also provided guarantees to customers regarding the delivery and performance of its products in addition to the warranty described below.
As a matter of ordinary course of business, Teradyne warrants that its products will substantially perform in accordance with its standard published specifications in effect at the time of delivery. Most warranties have a one-year duration commencing from installation. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based upon historical experience. When Teradyne receives revenue for extended warranties beyond the standard duration, the revenue is deferred and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred. As of December 31, 2025, and 2024 , Teradyne had a product warranty accrual of $ 19.2 million and $ 13.0 million, respectively, included in other accrued liabilities, and revenue deferrals related to extended warranties of $ 55.9 million and $ 41.6 million, respectively, included in short and long-term deferred revenue and customer advances.
In addition, in the ordinary course of business, Teradyne provides minimum purchase guarantees to certain vendors to ensure continuity of supply against the market demand. Although some of these guarantees provide penalties for cancellations and/or modifications to the purchase commitments as the market demand decreases, most of the guarantees do not. Therefore, as the market demand decreases, Teradyne re-evaluates these guarantees and determines what charges, if any, should be recorded.
With respect to its agreements covering product, business or entity divestitures and acquisitions, Teradyne provides certain representations, warranties and covenants to purchasers and agrees to indemnify and hold such purchasers harmless against breaches of such representations, warranties and covenants. Many of the indemnification claims have a definite expiration date while some remain in force indefinitely. With respect to its acquisitions, Teradyne may, from time to time, assume the liability for certain events or occurrences that took place prior to the date of acquisition.
As a matter of ordinary course of business, Teradyne occasionally guarantees certain indebtedness obligations of its subsidiary companies, limited to the borrowings from financial institutions, purchase commitments to certain vendors, and lease commitments to landlords.

Based on historical experience and information known as of December 31, 2025, and 2024 , except for product warranty, Teradyne has not recorded any liabilities for these guarantees and obligations because the amount would be immaterial.

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P. NET INCOME PER COMMON SHARE
The following table sets forth the computation of basic and diluted net income per common share:
 

 

 

2025

 

 

2024

 

 

2023

 

 

 

(in thousands, except per share amounts)

 

Net income for basic and diluted net income per share

 

$

554,047

 

 

$

542,372

 

 

$

448,752

 

Weighted average common shares-basic

 

 

159,119

 

 

 

159,083

 

 

 

154,310

 

Effect of dilutive potential common shares:

 

 

 

 

 

 

 

 

 

Convertible note hedge warrant shares (1)

 

 

—

 

 

 

3,563

 

 

 

8,897

 

Restricted stock units

 

 

572

 

 

 

651

 

 

 

423

 

Stock options

 

 

14

 

 

 

11

 

 

 

34

 

Employee stock purchase rights

 

 

14

 

 

 

6

 

 

 

7

 

Incremental shares from assumed conversion of convertible notes (2)

 

 

—

 

 

 

—

 

 

 

633

 

Dilutive potential common shares

 

 

600

 

 

 

4,231

 

 

 

9,994

 

Weighted average common shares-diluted

 

 

159,719

 

 

 

163,314

 

 

 

164,304

 

Net income per common share-basic

 

$

3.48

 

 

$

3.41

 

 

$

2.91

 

Net income per common share-diluted

 

$

3.47

 

 

$

3.32

 

 

$

2.73

 

 
(1) Convertible notes hedge warrant shares were calculated using the difference between the average Teradyne stock price for the period and the warrant price, multiplied by the number of warrant shares. The result of this calculation, representing the total intrinsic value of the warrant, was divided by the average Teradyne stock price for the period.

(2) Incremental shares from the assumed conversion of the convertible notes was calculated using the difference between the average Teradyne stock price for the period and the conversion price, multiplied by the number of convertible notes shares. The result of this calculation, representing the total intrinsic value of the convertible debt, was divided by the average Teradyne stock price for the period.

The computation of diluted net income per common share for 2025 and 2024 excludes the effect of the potential exercise of stock options to purchase approximately 0.1 million shares and restricted stock units to purchase approximately 0.1 million shares because the effect would have been anti-dilutive.

Q. RESTRUCTURING AND OTHER
During the year ended December 31, 2025, Teradyne recorded $ 29.4 million of severance charges, $ 24.3 million of which is related to the Robotics restructuring which impacted approximately 400 employees, $ 2.0 million of which is related to Product Test and $ 1.6 million of which is related to Semiconductor Test . During year ended December 31, 2025 , Teradyne made $ 15.3 million of Robotics severance payments. Teradyne expects all Robotics severance payments to be made prior to the end of the third quarter of 2026. Additionally, Teradyne recorded $ 4.9 million of asset impairment expenses and $ 2.3 million of acquisition and divestiture expenses .
During the year ended December 31, 2024 , Teradyne recorded $ 5.2 million of severance charges related to headcount reductions of 98 people primarily in Robotics and Semiconductor Test, which included charges related to a voluntary early retirement program for employees meeting certain conditions, $ 3.6 million of acquisition and divestiture expenses, and $ 1.3 million of charges related to lease terminations.
During the year ended December 31, 2023 , Teradyne recorded $ 14.7 million of severance charges related to headcount reductions of 215 people primarily in Semiconductor Test and Robotics, which included charges related to a voluntary early retirement program for employees meeting certain conditions, $ 3.1 million of acquisition and divestiture expenses related to Technoprobe transaction, a $ 1.5 million contract termination charge, and a charge of $ 1.1 million for an increase in environmental liabilities.

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

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Defined Benefit Pension Plans
Teradyne has defined benefit pension plans covering a portion of domestic employees and employees of certain non-U.S. subsidiaries. Benefits under these plans are based on employees’ years of service and compensation. Teradyne’s funding policy is to make contributions to the plans in accordance with local laws and to the extent that such contributions are tax deductible. The assets of these plans consist primarily of fixed income and equity securities. In addition, Teradyne has an unfunded supplemental executive defined benefit plan in the United States to provide retirement benefits in excess of levels allowed by the Employment Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (the “IRC”), as well as unfunded qualified foreign plans.
In 2025 , Teradyne recognized a non-cash settlement gain of $ 0.8 million related to lump sum distributions paid to retired or terminated employees. The charge is the result of the aggregate of the cumulative lump sum distributions exceeded the total annual service and interest costs. In addition, Teradyne contributed $ 3.3 million to the U.S. supplemental executive defined benefit pension plan, and $ 1.2 million to certain qualified pension plans for non-U.S. subsidiaries. In 2024 , Teradyne purchased a group annuity contract for its retiree participants in the U.S. qualified pension plan. Under the group annuity, the accrued pension obligation for 132 retiree participants were transferred to an insurance company. The reduction in the pension benefit obligation and pension assets was $ 23.4 million. During the year ended December 31, 2024 , Teradyne recorded settlement expense of $ 0.4 million related to the retiree group annuity transaction.
In 2025, Teradyne’s projected benefit obligations increased prim arily due to $ 2.9 million acquired plan from AET, actuarial losses of $ 1.7 million in the U.S. supplemental executive defined benefit plan from decreases in discount rates, and $ 4.1 million of losses from foreign exchange effects for foreign plans. In 2024, Teradyne’s projected benefit obligations decreased primarily due to the $ 23.4 million purchase of a group annuity contract for its retiree participants in the U.S. qualified pension plan, actuarial gains of $ 8.0 million across all pension plans from increases in discount rates, and $ 2.0 million of gains from foreign exchange effects for foreign plans.
 

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The December 31 balances of these defined benefit pension plans assets and obligations are shown below:
 

 

 

2025

 

 

2024

 

 

 

United States

 

 

Foreign

 

 

United States

 

 

Foreign

 

 

 

(in thousands)

 

Assets and Obligations

 

 

 

 

 

 

 

 

 

 

 

 

Change in benefit obligation:

 

 

 

 

 

 

 

 

 

 

 

 

Projected benefit obligation:

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of year

 

$

110,696

 

 

$

30,273

 

 

$

144,187

 

 

$

33,984

 

Acquisition

 

 

—

 

 

 

3,077

 

 

 

—

 

 

 

—

 

Service cost

 

 

613

 

 

 

1,094

 

 

 

881

 

 

 

446

 

Interest cost

 

 

5,703

 

 

 

1,204

 

 

 

6,292

 

 

 

953

 

Actuarial (gain) loss

 

 

3,218

 

 

 

( 1,513

)

 

 

( 6,014

)

 

 

( 1,972

)

Benefits paid

 

 

( 9,874

)

 

 

( 1,254

)

 

 

( 11,658

)

 

 

( 955

)

Retiree annuity purchase

 

 

—

 

 

 

—

 

 

 

( 23,386

)

 

 

—

 

Liability (gain) loss due to settlement

 

 

—

 

 

 

( 213

)

 

 

394

 

 

 

( 195

)

Participants contribution

 

 

—

 

 

 

4

 

 

 

—

 

 

 

—

 

Non-U.S. currency movement

 

 

—

 

 

 

4,076

 

 

 

—

 

 

 

( 1,988

)

End of year

 

 

110,356

 

 

 

36,748

 

 

 

110,696

 

 

 

30,273

 

Change in plan assets:

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets:

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of year

 

 

81,417

 

 

 

1,988

 

 

 

112,617

 

 

 

1,929

 

Acquisition

 

 

—

 

 

 

2,672

 

 

 

—

 

 

 

—

 

Actual return on plan assets

 

 

5,778

 

 

 

216

 

 

 

779

 

 

 

77

 

Company contributions

 

 

3,328

 

 

 

1,166

 

 

 

3,065

 

 

 

1,024

 

Benefits paid

 

 

( 9,874

)

 

 

( 1,085

)

 

 

( 11,658

)

 

 

( 955

)

Retiree annuity purchase

 

 

—

 

 

 

—

 

 

 

( 23,386

)

 

 

—

 

Settlements gain

 

 

—

 

 

 

( 204

)

 

 

—

 

 

 

( 195

)

Participants contribution

 

 

—

 

 

 

4

 

 

 

—

 

 

 

—

 

Non-U.S. currency movement

 

 

—

 

 

 

427

 

 

 

—

 

 

 

108

 

End of year

 

 

80,649

 

 

 

5,183

 

 

 

81,417

 

 

 

1,988

 

Funded status

 

$

( 29,706

)

 

$

( 31,565

)

 

$

( 29,279

)

 

$

( 28,285

)

 
The following table provides amounts recorded within the account line items of the statements of financial position as of December 31:
 

 

 

2025

 

 

2024

 

 

 

United States

 

 

Foreign

 

 

United States

 

 

Foreign

 

 

 

(in thousands)

 

Retirement plans assets

 

$

12,059

 

 

$

319

 

 

$

11,994

 

 

$

—

 

Accrued employees’ compensation and withholdings

 

 

( 3,555

)

 

 

( 1,259

)

 

 

( 3,263

)

 

 

( 969

)

Retirement plans liabilities

 

 

( 38,211

)

 

 

( 30,626

)

 

 

( 38,010

)

 

 

( 27,316

)

Funded status

 

$

( 29,706

)

 

$

( 31,565

)

 

$

( 29,279

)

 

$

( 28,285

)