Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-KANNUAL REPORT

PURSUANT TO SECTIONS 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934

(MARK ONE)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2018

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934

Commission file number 001-06462

TERADYNE, INC.(Exact Name of Registrant as Specified in Its Charter)

MASSACHUSETTS 04-2272148(State or Other Jurisdiction of

Incorporation or Organization) (I.R.S. Employer

Identification Number)

600 RIVERPARK DRIVENORTH READING, MASSACHUSETTS 01864

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (978) 370-2700Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, par value $0.125 per share Nasdaq Stock Market LLC

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934

during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File to be submitted pursuant to Rule 405 ofRegulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit suchfiles). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405) is not contained herein, and will not becontained to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K orin any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of theExchange Act (check one):

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any

new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 29, 2018 was approximately $6.4 billion based upon

the closing price of the registrant’s Common Stock on the New York Stock Exchange on that date.The number of shares outstanding of the registrant’s only class of Common Stock as of February 25, 2019 was 173,629,283 shares.

DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s proxy statement in connection with its 2019 annual meeting of shareholders are incorporated by reference into Part III of this

Form 10-K.

Table of Contents

TERADYNE, INC.

INDEX Page No.

PART I. Item 1. Business 1 Item 1A. Risk Factors 10 Item 1B. Unresolved Staff Comments 20 Item 2. Properties 21 Item 3. Legal Proceedings 21 Item 4. Mine Safety Disclosure 21

PART II. Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 22 Item 6. Selected Financial Data 22 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation 23 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 42 Item 8. Financial Statements and Supplementary Data 44 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 106 Item 9A. Controls and Procedures 106 Item 9B. Other Information 107

PART III. Item 10. Directors, Executive Officers and Corporate Governance 108 Item 11. Executive Compensation 108 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 108 Item 13. Certain Relationships and Related Transactions, and Director Independence 108 Item 14. Principal Accountant Fees and Services 108

PART IV. Item 15. Exhibits and Financial Statement Schedule 109 Item 16. Form 10-K Summary 110

Signatures 116

Table of Contents

TERADYNE, INC.

FORM 10-K

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995,Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. When used herein, the words “will,” “would,” “believe,” “anticipate,”“plan,” “expect,” “estimate,” “project,” “intend,” “may,” “see,” “target” and other words and terms of similar meaning are intended to identify forward-looking statements although not all forward looking statements contain these identifying words. Forward looking statements involve risks and uncertainties,including, but not limited to, those discussed in the section entitled “Risk Factors” of this annual report on Form 10-K and elsewhere, and in other reportswe file with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements which reflectmanagement’s analysis only as of the date hereof and are subject to risks and uncertainties that could cause actual results to differ materially from thosestated or implied. Teradyne assumes no obligation to update these forward-looking statements for any reason, except as may be required by law.

PART I Item 1: Business

Teradyne, Inc. (“Teradyne”) was founded in 1960 and is a leading global supplier of automation equipment for test and industrial applications.

We design, develop, manufacture and sell automatic test systems used to test semiconductors, wireless products, data storage and complex electronicssystems in the consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Our industrialautomation products include collaborative robotic arms, autonomous mobile robots and advanced robotic control software used by global manufacturing andlight industrial customers to improve quality, increase manufacturing and material handling efficiency and decrease manufacturing costs. Our automatic testequipment and industrial automation products and services include:

• semiconductor test (“Semiconductor Test”) systems;

• defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, storage test (“Storage Test”) systems, and circuit-board test and

inspection (“Production Board Test”) systems (collectively these products represent “System Test”);

• industrial automation (“Industrial Automation”) products; and

• wireless test (“Wireless Test”) systems.

We have a customer base which includes integrated device manufacturers (“IDMs”), outsourced semiconductor assembly and test providers(“OSATs”), original equipment manufacturers (“OEMs”), wafer foundries, fabless companies that design, but contract with others for the manufacture ofintegrated circuits (“ICs”), developers of wireless devices and consumer electronics, manufacturers of circuit boards, automotive suppliers, wireless productmanufacturers, storage device manufacturers, aerospace and military contractors, and distributors that sell collaborative robots, autonomous mobile robotsand wireless test systems.

The market for our test products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchasesof test equipment. One customer drives significant demand for our products both through direct sales and sales to the customer’s supply partners. We expectthat sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future.

1

Table of Contents

The sales of our products and services are dependent, to a large degree, on customers who are subject to cyclical trends in demand for their products.These cyclical periods have had, and will continue to have, a significant effect on our business because our customers often delay or accelerate purchases inreaction to changes in their businesses and to demand fluctuations in the semiconductor and electronics industries. Historically, these demand fluctuationshave resulted in significant variations in our results of operations. During the first quarter of 2018, demand outlook for mobile device test capacity in 2018declined sharply for our Semiconductor Test business. Demand in other segments of the Semiconductor Test business, including memory test, increased in2018.

In 2015, we acquired Universal Robots A/S (“Universal Robots”), the leading supplier of collaborative robots which are low-cost, easy-to-deploy andsimple-to-program robots that work side by side with production workers to improve quality, increase manufacturing efficiency and decrease manufacturingcosts. The acquisition of Universal Robots provides a growth engine to our business. The total purchase price for Universal Robots was approximately$315 million, which included cash paid of approximately $284 million and $32 million in fair value of contingent consideration payable upon achievementof revenue and earnings targets through 2018. Contingent consideration for 2015 was $15 million and was paid in February 2016. Contingent considerationfor the period from July 2015 to December 2017 was $24.6 million and was paid in March 2018. Contingent consideration for the period from July 2015 toDecember 2018 was $3.9 million and is expected to be paid in March 2019.

On February 26, 2018, we acquired Energid Technologies Corporation (“Energid”) for a total purchase price of approximately $27.6 million.Energid’s technology enables and simplifies the programming of complex robotic motions used in a wide variety of end markets, ranging from heavyindustry to healthcare, utilizing both traditional robots and collaborative robots.

On April 25, 2018, we acquired Mobile Industrial Robots ApS (“MiR”), a Danish limited liability company. MiR is the leading maker of collaborativeautonomous mobile robots for industrial applications. The total purchase price was approximately $198 million, which included cash paid of approximately$145 million and $53 million in fair value of contingent consideration payable upon achievement of certain thresholds and targets for revenue and earningsbefore interest and taxes through 2020. At December 31, 2018, the maximum amount of contingent consideration that could be paid is $115 million.Contingent consideration for 2018 was $31.0 million and is expected to be paid in March 2019.

Universal Robots, MiR and Energid are included in our Industrial Automation segment.

Investor Information

We are a Massachusetts corporation incorporated on September 23, 1960. We are subject to the informational requirements of the Securities ExchangeAct of 1934 (“Exchange Act”). We file periodic reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”).The SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers thatfile documents electronically.

You can access financial and other information, including the charters of our Audit Committee, Compensation Committee and Nominating andCorporate Governance Committee, our Corporate Governance Guidelines and Code of Conduct, by clicking the Investors link on our web site atwww.teradyne.com. We make available, free of charge, copies of our filings with the SEC, including our annual reports on Form 10-K, quarterly reports onForm 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act throughour web site as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC.

2

Table of Contents

Products

Semiconductor Test

We design, manufacture, sell and support Semiconductor Test products and services on a worldwide basis. The test systems we provide are used bothfor wafer level and device package testing. These chips are used in automotive, industrial, communications, consumer, and computer and electronic gameapplications, among others. Semiconductor devices span a broad range of functionality, from very simple low-cost devices such as appliancemicrocontrollers, operational amplifiers or voltage regulators to complex digital signal processors and microprocessors as well as memory devices.Semiconductor Test products and services are sold to IDMs that integrate the fabrication of silicon wafers into their business, “Fabless” companies thatoutsource the manufacturing of silicon wafers, “Foundries” that cater to the processing and manufacturing of silicon wafers, and OSATs that provide testand assembly services for the final packaged devices to both Fabless companies and IDMs. Fabless companies perform the design of integrated circuitswithout manufacturing capabilities, and use Foundries for wafer manufacturing and OSATs for test and assembly. These customers obtain the overall benefitof comprehensively testing devices and reducing the total costs associated with testing by using our Semiconductor Test systems to:

• improve and control product quality;

• measure and improve product performance;

• reduce time to market; and

• increase production yields.

Our FLEX Test Platform architecture advances our core technologies to produce test equipment that is designed for high efficiency multi-site testing.Multi-site testing involves the simultaneous testing of many devices in parallel. Leading semiconductor manufacturers are using multi-site testing tosignificantly improve their “Cost of Test” economics. The FLEX Test Platform architecture addresses customer requirements through the following keycapabilities:

• A high efficiency multi-site architecture that reduces tester overhead such as instrument setup, synchronization and data movement, and signal

processing;

• The IG-XL™ software operating system which provides fast program development, including instant conversion from single to multi-site test;

and

• Broad technology coverage by instruments designed to cover the range of test parameters, coupled with a universal slot test head design that

allows easy test system reconfiguration to address changing test needs.

FLEX Test Platform purchases are being made by IDMs, OSATs, Foundries and Fabless customers. The FLEX Test Platform has become a widelyused test solution at OSATs by providing versatile testers that can handle the widest range of devices, allowing OSATs to leverage their capital investments.The broad consumer, automotive and broadband markets have historically driven most of the device volume growth in the semiconductor industry. Thesemarkets include smart phones, cell phones, tablets, set top boxes, HDTVs, game controllers, computer graphics, and automotive controllers to name a few.These end use markets continue to be drivers for the FLEX Test Platform family of products because they require a wide range of technologies andinstrument coverage. The UltraFLEX-M tester extends the FLEX Test Platform into the High Speed DRAM testing market. The FLEX Test Platform has aninstalled base of more than 6,400 systems.

Our J750™ test system shares the IG-XL software environment with the family of FLEX Test Platform systems. The J750 is designed to address thehighest volume semiconductor devices, such as microcontrollers, that are central to the functionality of almost every consumer electronics product, fromsmall appliances to automobiles. J750 test systems combine compact packaging, high throughput and ease of production test. We

3

Table of Contents

extended the J750 platform technology to create the IP750 Image Sensor™ test system. The IP750 is focused on testing image sensor devices used in smartphones and other imaging products. We have continued to invest in the J750 platform with new instrument releases that bring new capabilities to existingmarket segments and expand the J750 platform to new devices that include high end microcontrollers and the latest generation of cameras. The J750platform has an installed base of over 5,600 systems.

Our Magnum platform addresses the requirements of mass production test of memory devices such as flash memory and DRAM. Flash and DRAMmemory are widely used core building blocks in modern electronic products finding wide application in consumer, industrial, and computing equipment.Magnum V, the newest member of the family, is a next generation memory test solution designed for parallel memory test in the flash, DRAM and multi-chip package markets. In 2019, we plan to introduce a high-speed DRAM test version of our Magnum platform giving us full product coverage of thememory test market. The Magnum platform has an installed base of over 2,600 systems.

Our ETS platform is used by semiconductor manufacturers and assembly and test subcontractors, primarily in the analog/mixed signal markets thatcover more cost sensitive applications. Our proprietary SmartPin™ technology enables high efficiency multi-site testing, on an individual test system,permitting greater test throughput. Semiconductors tested by ETS platform systems are incorporated into a wide range of products in historically high-growth markets, including mobile devices, video/multimedia products, automotive electronics, computer peripherals, and notebook and desktop computers.The newest products from the platform include the ETS-88, a high performance multi-site production test system designed to test a wide variety of highvolume commodity and precision devices, and the ETS-800, a high performance multi-site production test system to test high complexity power devices inautomotive, industrial and consumer applications. The ETS platform has an installed base of over 4,900 systems.

System Test

Our System Test segment is comprised of three business units: Defense/Aerospace, Storage Test and Production Board Test.

Defense/Aerospace

We are a leading provider of high performance test systems, subsystems, instruments and service for the defense and aerospace markets. Our testproducts are used to ensure the readiness of military and commercial aerospace electronics systems. New programs, such as tactical aircraft and missilesystems, as well as upgrade programs, continue to fuel the demand for high performance test systems in this market. Our test products are well-suited to thedemands of defense/aerospace electronics manufacturers and repair depots worldwide. Our leadership in this market is underscored by our success withmajor Department of Defense programs across all U.S. military service branches and many allied defense services worldwide.

Storage Test

The Storage Test business unit addresses the high throughput, automated manufacturing test requirements of hard disk drive (“HDD”) and solid statedisk (“SSD”) manufacturers and semiconductor manufacturers. Our products address the client and enterprise storage markets. The client market is drivenby the needs of desktop, laptop, and external HDD and SSD storage products. The enterprise market is driven by the needs of data centers and cloud storage.During 2017, we developed a system level test product for the semiconductor production market, which shipped in 2017 and 2018. The business unit’sproducts lead in addressing customer requirements related to factory density, throughput and thermal performance.

4

Table of Contents

Production Board Test

Our test systems are used by electronics manufacturers worldwide to perform In-Circuit-Test (“ICT”) and device programming of printed circuitboard assemblies. Fast, accurate and cost-effective test capabilities are hallmark features of our Test Station and Spectrum ICT product families. We offerthe Test Station in off-line and automated in-line configurations. The automated in-line configurations address the growing requirements for automatingproduction lines for high volume applications, such as automotive electronics.

Industrial Automation

Our Industrial Automation segment is comprised of three business units: Universal Robots, Mobile Industrial Robots and Energid.

Universal Robots

Universal Robots, which we acquired in June 2015, is the leading supplier of collaborative robots, which are low-cost, easy-to-deploy and simple-to-program robots that work side by side with production workers to improve quality, increase manufacturing efficiency and decrease manufacturing costs.Collaborative robots are designed to mimic the motion of a human arm and can be fitted with task specific grippers or fixtures to support a wide range ofapplications. Universal Robots offers three collaborative robot models, the UR3, UR5, and UR10, each with different weight carrying capacity and armreach. All models are easily integrated into existing production environments. Universal Robots’ products are differentiated by their:

• easy programming using a graphical interface which allows users to program the collaborative robot in a few hours;

• flexibility and ease of use in allowing customers to change the task the collaborative robot is performing as their production demands dictate;

• safe operations as collaborative robots can assist workers in side by side production environments requiring no special safety enclosures or

shielding to protect workers; and

• short payback period, on average less than 12 months.

In 2018, Universal Robots introduced its e-series collaborative robots which include technology advances that enable faster development ofapplications, greater precision and improved safety.

Cumulatively, Universal Robots has sold over 30,000 collaborative robots in diverse production environments and applications.

Mobile Industrial Robots

MiR, which was acquired in April 2018, is the leading supplier of collaborative autonomous mobile robots, which are low-cost, easy-to-deploy andsimple-to-program mobile robots that increase manufacturing and warehouse efficiency and decrease costs. Collaborative autonomous mobile robots aredesigned to move material from point to point via autonomous navigation rather than the need for traditional mobile robot guidance infrastructure such aspainted or magnetic strips, and are designed to navigate safely around obstacles and people. MiR offers three collaborative autonomous mobile robotmodels, the MiR100, MiR200, MiR500, each with different payload carrying capacity. All models are easily integrated into existing productionenvironments. MiR’s products are differentiated by their:

• easy programming using a graphical interface which allows users to program the collaborative robot in a few hours;

• ease of use, speed of deployment and flexibility in allowing customers to change the task as their demands dictate;

5

Table of Contents

• reliable autonomous navigation over large manufacturing and warehouse areas; and

• short payback period, on average less than 12 months.

Cumulatively, MiR has sold over 1,800 collaborative autonomous mobile robots in diverse production and warehouse environments and applications.

Energid

Energid, which was acquired in February 2018, is a leading supplier of real-time advanced robot motion control software, which automation suppliersuse to coordinate the control of multiple automation axes for performing tasks. Motion control software performs the complex mathematics and functionsneeded to enable robot motion for tasks such as grasping and moving an object. Energid offers developer and run time licenses of its Actin software. Actin isintegrated by customers into the customers’ robot and automation solutions. Actin products are differentiated by their:

• highly flexible, adaptive, robot motion control; and

• task optimized robotic path planning.

Cumulatively, Energid has sold over 500 Actin developer and run time licenses deployed in diverse automation applications.

Wireless Test

Our acquisition of LitePoint in 2011 and ZTEC Instruments Inc. (“ZTEC”) in 2013 expanded our product offerings in the wireless test market. Underthe LitePoint brand name, these products provide test solutions utilized in the development and manufacturing of wireless devices. The world’s leadingmakers of smart phones, tablets, notebooks, laptops, peripherals, and Internet-of-Things (IoT) devices rely on LitePoint technology to ensure their productsget into consumer hands with high quality and high efficiency.

LitePoint hardware and software wireless test solutions are used in test insertions that span design verification to high volume manufacturing and aredeployed across the entire production eco-system from the wireless chipset suppliers to the consumer brands. Wireless devices are often tested at multiplepoints along the manufacturing process that include insertions at component, system-in-package (“SiP”), module, PCB, SMT and finished product stages.

Design verification is an important step in the development process for evaluating product performance prior to starting production. As end marketunit volumes have increased, the quantity of units and the amount of data that must be analyzed for a successful product launch continues to grow. LitePointproducts provide easy to use, domain specific tools for rapid analysis of product performance. This helps to speed time to market.

In high volume manufacturing, before products are packaged and shipped, wireless test enables the calibration of each individual product’s wirelessperformance to improve range, data throughput and battery life. Testing also verifies product specifications for product quality control. As markets becomeincreasingly competitive, product performance and quality provide brand differentiation.

Wireless standards can be thought of in two categories, connectivity and cellular. Connectivity covers many standards such as Wi-Fi, Bluetooth, andGPS. LitePoint’s IQxel products cover emerging Wi-Fi standards such as 802.11ax and 802.11ad as well as the existing standards 802.11a/b/g/n and 11ac,and includes a variety of other standards such as Bluetooth Classic, Bluetooth 5.0 and Bluetooth low energy, Zigbee, Z-Wave, NFC, LoRa, GPS, GLONASSand others.

6

Table of Contents

The IQxel product family’s high-performance wireless and multi-device testing economics is aligned with the needs of networking equipment,Internet gateways, IoT products and embedded modules used in smartphones, tablets, and PCs. Another connectivity product, the IQnfc, addresses thegrowing use of NFC technology for payments with mobile devices.

Cellular standards include 2G, 3G, 4G and emerging 5G mobile phone technologies. LitePoint’s IQxstream is a multi-device production testoptimized solution for high-speed testing of GSM, EDGE, CDMA2000, TD-SCDMA, WCDMA, HSPA+, LTE-FDD, TD_LTE, and LTE-A, and 5Gtechnologies. It is used for calibration and verification of smartphones, tablets, small cell wireless gateways and embedded cellular modules. The IQcell, is amulti-device cellular signaling test solution which enables user experience testing of LTE cellular devices via over-the-air connections. The IQgig familyprovides test solution at the intermediary and millimeter wave frequencies for 5G and 802.11ad.

An important component in all wireless systems is the analog RF front end. The performance of these components is continually pushed higher asdevice makers add more bands, channels, antennas and higher data rates. We offer the LitePoint zSeries of modular wireless test instruments for designverification test and production testing of these wireless components. The lab-in-a-box zSeries solution provides simple and fast design verification of RFpower amplifier and smart device RF front end modules. It is capable of rapid analysis of the latest digital pre-distortion and envelope tracking technologiesfor both LTE and Wi-Fi standards. A ruggedized version of the product is designed for high volume testing of these same devices.

To complement the test systems, LitePoint offers turnkey test software for over 350 of the most popular wireless chipsets. These optimized solutionsprovide rapid development of high volume manufacturing solutions with a minimum of engineering effort by customers.

Sales and Distribution

In 2018, no single customer accounted for more than 10% of our consolidated revenues. In 2017 and 2016, revenues from Taiwan SemiconductorManufacturing Company Ltd. accounted for 13% and 12%, respectively, of our consolidated revenues. In 2016, revenues from JA Mitsui Leasing, Ltd.accounted for 12% of our consolidated revenues. Taiwan Semiconductor Manufacturing Company Ltd. and JA Mitsui Leasing, Ltd. are customers of ourSemiconductor Test segment. In each of the years, 2018, 2017, and 2016, our five largest customers in aggregate accounted for 27%, 32% and 36% of ourconsolidated revenues, respectively.

OSAT customers, such as Taiwan Semiconductor Manufacturing Company Ltd., often purchase our test systems based upon recommendations fromOEMs, IDMs and Fabless companies. In all cases when an OSAT customer purchases a test system from us, we consider the OSAT as the customer sincecredit risk, title and risk of loss, among other things, are between Teradyne and the OSAT. We estimate consolidated revenues driven by a single OEMcustomer, combining direct sales to that customer with sales to the customer’s OSATs (which include Taiwan Semiconductor Manufacturing Company Ltd.and its leasing company, JA Mitsui Leasing, Ltd.), accounted for approximately 13%, 22%, and 26% of our consolidated revenues in 2018, 2017, and 2016,respectively. The loss of, or significant decrease in demand from, this OEM customer, or any of our five largest direct customers, could have a materialadverse effect on our business, results of operations and financial condition.

We have sales and service offices located throughout North America, Asia and Europe. We sell in these areas predominantly through a direct salesforce, except for Industrial Automation products which are sold through distributors. Our manufacturing activities are primarily conducted throughsubcontractors and outsourced contract manufacturers with significant operations in China and Malaysia.

Sales to customers outside the United States were 87%, 88%, and 87%, respectively, of our consolidated revenues in 2018, 2017 and 2016. Sales areattributed to geographic areas based on the location of the customer site.

7

Table of Contents

See also “Item 1A: Risk Factors” and Note R: “Operating Segment, Geographic and Significant Customer Information” in Notes to ConsolidatedFinancial Statements.

Competition

We face significant competition throughout the world in each of our reportable segments. Competitors in the Semiconductor Test segment include,among others, Advantest Corporation and Cohu, Inc.

Competitors in the System Test segment include, among others, Keysight Technologies, Inc., Advantest Corporation, Test Research, Inc. and SPEAS.p.A.

Competitors in our Industrial Automation segment include manufacturers of traditional industrial robots such as KUKA Robotics Corporation, ABB,FANUC and Yaskawa Electric Corporation, companies with emerging collaborative robot offerings such as Techman, Doosan, and AUBO Robotics, andmanufacturers of autonomous mobile robots such as Omron, Fetch, and OTTO Motors.

Competitors in our Wireless Test segment include, among others, Rohde & Schwarz GmbH & Co. KG, Anritsu Company, Keysight Technologies,Inc. and National Instruments Corporation.

Some of our competitors have substantially greater financial and other resources to pursue engineering, manufacturing, marketing and distribution oftheir products. We also face competition from emerging Asian companies and from internal suppliers at several of our customers. Some of our competitorshave introduced or announced new products with certain performance characteristics which may be considered equal or superior to those we currently offer.We expect our competitors to continue to improve the performance of their current products and to introduce new products or new technologies that provideimproved cost of ownership and performance characteristics. See also “Item 1A: Risk Factors.”

Backlog

At December 31, 2018 and 2017, our backlog of unfilled orders in our four reportable segments was as follows: 2018 2017 (1) (in millions) Semiconductor Test $367.5 $464.2 System Test 149.5 111.9 Wireless Test 32.0 35.5 Industrial Automation 19.7 14.8

$568.7 $626.4

(1) December 31, 2017 backlog has not been adjusted for the new revenue standard adopted January 1, 2018. If the Wireless Test backlog was calculated

based on the new revenue standard, the backlog balance would have been $21.3 million. Backlog for each of the other reportable segments was notmaterially affected by the adoption of the new revenue standard.

Of the backlog at December 31, 2018, approximately 98% of the Semiconductor Test backlog, 89% of the System Test backlog, and 35% of theIndustrial Automation backlog is expected to be delivered in 2019.

Customers may delay delivery of products or cancel orders suddenly and without advanced notice, subject to possible cancellation penalties. Due topossible customer changes in delivery schedules and cancellation of orders, our backlog at any particular date is not necessarily indicative of the actual salesfor any succeeding period. Delays in delivery schedules or cancellations of backlog during any particular period could have a material adverse effect on ourbusiness, financial condition or results of operations.

8

Table of Contents

Raw Materials

Our products contain electronic and mechanical components that are provided by a wide range of suppliers. Some of these components are standardproducts, while others are manufactured to our specifications. We can experience occasional delays in obtaining timely delivery of certain items. While themajority of our components are available from multiple suppliers, certain items are obtained from sole sources. We may experience a temporary adverseimpact if any of our sole source suppliers delay or cease to deliver products.

Intellectual Property and Licenses

The development of our products, both hardware and software, is based in significant part on proprietary information, our brands and technology. Weprotect our rights in proprietary information, brands and technology through various methods, such as:

• patents;

• copyrights;

• trademarks;

• trade secrets;

• standards of business conduct and related business practices; and

• technology license agreements, software license agreements, non-disclosure agreements, employment agreements, and other agreements.

However, these protections might not be effective in all circumstances. Competitors might independently develop similar technology or exploit ourproprietary information and our brands in countries where we lack enforceable intellectual property rights or where enforcement of such rights through thelegal system provides an insufficient deterrent. Also, intellectual property protections can lapse or be invalidated through appropriate legal processes. We donot believe that any single piece of intellectual property or proprietary rights is essential to our business.

Employees

As of December 31, 2018, we employed approximately 4,900 people. Since the inception of our business, we have experienced no work stoppages orother labor disturbances.

Environmental Affairs

We are subject to various federal, state, and local government laws and regulations relating to the protection of employee health and safety and theenvironment. We accrue for all known environmental liabilities when it becomes probable that we will incur cleanup costs and those costs can reasonably beestimated. Estimated environmental costs are not expected to materially affect the financial position or results of our operations in future periods. However,estimates of future costs are subject to change due to protracted cleanup periods and changing environmental remediation laws and regulations.

9

Table of Contents

OUR EXECUTIVE OFFICERS

Pursuant to General Instruction G(3) of Form 10-K, the following table is included in Part I of this Annual Report on Form 10-K in lieu of beingincluded in the Proxy Statement for the Annual Meeting of Shareholders. The table sets forth the names of all of our executive officers and certain otherinformation relating to their positions held with Teradyne and other business experience. Our executive officers do not have a specific term of office butrather serve at the discretion of the Board of Directors. Executive Officer Age Position Business Experience For The Past 5 YearsMark E. Jagiela

58

Chief Executive Officer andPresident

Chief Executive Officer since February 2014; President of Teradyne sinceJanuary 2013; President of Semiconductor Test from 2003 to February2016; Vice President of Teradyne from 2001 to 2013.

Gregory R. Beecher

61

Vice President, Chief FinancialOfficer and Treasurer

Vice President and Chief Financial Officer of Teradyne since 2001;Treasurer of Teradyne from 2003 to 2005 and since 2006.

Charles J. Gray

57

Vice President, General Counseland Secretary

Vice President, General Counsel and Secretary of Teradyne since April2009.

Bradford B. Robbins

60

President of Wireless Test

President of Wireless Test since August 2014; Chief Operating Officer ofLitePoint Corporation from 2012 to 2014; Vice President of Teradynesince 2001.

Gregory S. Smith

55

President of Semiconductor Test

President of Semiconductor Test since February 2016; Vice President,SOC Business Group and Marketing Manager for Semiconductor TestGroup from January 2014 to February 2016; Business Unit Manager,Complex SOC Business Unit from 2009 to January 2014.

Walter G. Vahey

54

Executive Vice President,Business Development

Executive Vice President, Business Development since December 2017;President of System Test from July 2012 to December 2017; VicePresident of Teradyne since 2008; General Manager of Storage Test from2008 to December 2017; General Manager of Production Board Test fromApril 2013 to December 2017.

Item 1A: Risk Factors

Risks Associated with Our Business

The risks described below are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem tobe immaterial also may materially adversely affect our business, financial condition and/or operating results.

Our business is impacted by global and industry-specific economic cycles, which are difficult to predict, and actions we have taken or may take to offsetthese cycles may not be sufficient.

Capital equipment providers in the electronics and semiconductor industries, such as Teradyne, have, in the past, been negatively impacted by bothsudden slowdowns in the global economies and recurring cyclicality

10

Table of Contents

within those industries. These cycles have resulted in periods of over-supply; a trend we believe will continue to occur for newer generations of electronicproducts. Our business and results of operations depend, in significant part, upon capital expenditures of manufacturers of semiconductors and otherelectronics, which in turn depend upon the current and anticipated market demand for those products. Disruption or deterioration in economic conditionsmay reduce customer purchases of our products, thereby reducing our revenues and earnings. In addition, such adverse changes in economic conditions, andresulting slowdowns in the market for our products, may, among other things, result in increased price competition for our products, increased risk of excessand obsolete inventories, increased risk in the collectability of our accounts receivable from our customers, potential reserves for doubtful accounts andwrite-offs of accounts receivable, increased risk of restructuring charges, and higher operating costs as a percentage of revenues, which, in each case andtogether, adversely affect our operating results. We are unable to predict the likely duration, frequency and severity of disruptions in financial markets, creditavailability, and adverse economic conditions throughout the world, and we cannot ensure that the level of revenues or new orders for a fiscal quarter will besustained in subsequent quarters. We have taken actions to address the effects of general economic variability and recurring industry cyclicality, includingimplementing cost control and reduction measures. We cannot predict whether these measures will be sufficient to offset global or market-specificdisruptions that might affect our test businesses and we may need to take additional or different measures in the future.

We are subject to intense competition.

We face significant competition throughout the world in each of our reportable segments. Some of our competitors have substantial financial andother resources to pursue engineering, manufacturing, marketing and distribution of their products. We also face competition from emerging Asianequipment companies and internal development at several of our customers. Some of our competitors have introduced or announced new products withcertain performance characteristics that may be considered equal or superior to those we currently offer. We expect our competitors to continue to improvethe performance of their current products and to introduce new products or new technologies that provide improved cost of ownership and performancecharacteristics. New product introductions by competitors could cause a decline in revenues or loss of market acceptance of our products.

The market for our products is concentrated, and our business depends, in part, on obtaining orders from a few significant customers.

The market for our products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases oftest equipment. In each of the years 2018, 2017, and 2016, our five largest customers in aggregate accounted for 27%, 32%, and 36% of consolidatedrevenues, respectively. We estimate consolidated revenues driven by a single OEM customer, combining direct sales to that customer with sales to thecustomer’s OSATs (which include Taiwan Semiconductor Manufacturing Company Ltd. and its leasing company, JA Mitsui Leasing, Ltd.), accounted forapproximately 13%, 22%, and 26% of our consolidated revenues in 2018, 2017, and 2016, respectively. In any one reporting period, a single customer orseveral customers may contribute even a larger percentage of our consolidated revenues. In addition, our ability to increase sales will depend, in part, on ourability to obtain orders from current or new significant customers. The opportunities to obtain orders from these customers may be limited, which mayimpair our ability to grow revenues. We expect that sales of our products will continue to be concentrated with a limited number of significant customers forthe foreseeable future. The loss of a significant customer or any reduction in orders by these customers, including reductions due to market or competitiveconditions, such as we experienced in our Wireless Test segment, would likely have a material adverse effect on our business, financial condition or resultsof operations.

11

Table of Contents

Our operating results are likely to fluctuate significantly.

Our operating results are affected by a wide variety of factors that could materially adversely affect revenues or profitability. The following factorscould impact future operations:

• a worldwide economic slowdown or disruption in the global financial markets;

• competitive pressures on selling prices;

• our ability to introduce, and the market acceptance of, new products;

• changes in product revenues mix resulting from changes in customer demand;

• the level of orders received which can be shipped in a quarter because of the tendency of customers to wait until late in a quarter to commit to

purchase due to capital expenditure approvals and constraints occurring at the end of a quarter, or the hope of obtaining more favorable pricingfrom a competitor seeking the business;

• engineering and development investments relating to new product introductions, and the expansion of manufacturing, outsourcing and

engineering operations in Asia;

• provisions for excess and obsolete inventory relating to the lack of demand for and the discontinuance of products;

• impairment charges for certain long-lived and intangible assets, and goodwill;

• an increase in the leasing of our products to customers;

• our ability to expand our global distribution channel for our collaborative robots;

• parallel or multi-site testing could lead to a decrease in the ultimate size of the market for our products; and

• the ability of our suppliers and subcontractors to meet product quality or delivery requirements needed to satisfy customer orders for our

products, especially if consolidated revenues increase.

As a result of the foregoing and other factors, we have experienced and may continue to experience material fluctuations in future operating results ona quarterly or annual basis which could materially and adversely affect our business, financial condition, operating results or stock price.

We are subject to risks of operating internationally.

A significant portion of our total revenues is derived from customers outside the United States. Our international sales and operations are subject tosignificant risks and difficulties, including:

• unexpected changes in legal and regulatory requirements affecting international markets;

• changes in tariffs and exchange rates;

• social, political and economic instability, acts of terrorism and international conflicts;

• difficulties in protecting intellectual property;

• difficulties in accounts receivable collection;

• cultural differences in the conduct of business;

• difficulties in staffing and managing international operations;

• compliance with customs regulations; and

• compliance with international tax laws and regulations.

12

Table of Contents

In addition, an increasing portion of our products and the products we purchase from our suppliers are sourced or manufactured in foreign locations,including China and Malaysia, and a large portion of the devices our products test are fabricated and tested by foundries and subcontractors in Taiwan,China, Singapore and other parts of Asia. As a result, we are subject to a number of economic and other risks, particularly during times of political orfinancial instability in these regions. Disruption of manufacturing or supply sources in these international locations could materially adversely impact ourability to fill customer orders and potentially result in lost business.

The implementation of tariffs and export controls on our products may have a material impact on our business.

Our business operations and supply chain are global and may be disrupted by the implementation of tariffs and export controls on our products.

On July 6, 2018 and August 23, 2018, the United States Trade Representative imposed a 25% tariff on two lists of products, including certainTeradyne products that are made in China and imported into the United States. We have submitted requests for exclusion of our products from the tariff, butthere is no assurance that our requests will be approved. We have implemented operational changes that will mitigate the impact of the 25% tariff on theimport of our impacted products into the United States. As a result, we do not expect that the tariff will have a material adverse effect on our business,financial condition or results of operations.

On September 24, 2018, the United States Trade Representative imposed a 10% tariff on many additional products made in China and imported intothe United States. The tariff rate may increase to 25% in 2019. At this time, we do not expect that this tariff will significantly impact any Teradyne productsand thus the tariff should not have a material adverse effect on our business, financial condition or results of operations.

On June 29, 2018, the United States Department of Commerce announced that it has commenced a review of new export controls focusing onemerging and foundational technologies. While there is uncertainty as to the technologies that will be covered, the new export controls could covertechnologies used in one or more Teradyne products and, therefore, could impact the sale of certain Teradyne products and have a material adverse effect onour business, financial condition or results of operations.

The United States Department of Commerce from time to time has taken action to restrict the access of U.S.-origin technologies to Chinesecompanies by adding them to the Entity List under U.S. Export Administration Regulations. The addition to the Entity List of Chinese companies who arecustomers or potential customers could impact the sale and/or support of certain Teradyne products to those customers or potential customers and, therefore,have a material adverse effect on our business, financial condition or results of operations.

In addition to the actions taken by the United States, China has implemented retaliatory tariffs on products made in the United States and importedinto China, including certain Teradyne products. We plan to assess and implement, if appropriate, operational changes that would mitigate the impact of theretaliatory tariffs. However, notwithstanding our efforts, the retaliatory tariffs or other trade restrictions implemented by China could disrupt our businessoperations, sales and supply chain and, therefore, have a material adverse effect on our business, financial condition or results of operations.

If we fail to develop new technologies to adapt to our customers’ needs and if our customers fail to accept our new products, our revenues will beadversely affected.

We believe that our technological position depends primarily on the technical competence and creative ability of our engineers. In a rapidly evolvingmarket, such as ours, the development or acquisition of new technologies, commercialization of those technologies into products and market acceptance andcustomer

13

Table of Contents

demand for those products are critical to our success. Successful product development or acquisition, introduction and acceptance depend upon a number offactors, including:

• new product selection;

• ability to meet customer requirements;

• development of competitive products by competitors;

• timely and efficient completion of product design;

• timely and efficient implementation of manufacturing and manufacturing processes;

• timely remediation of product performance issues, if any, identified during testing;

• assembly processes and product performance at customer locations;

• differentiation of our products from our competitors’ products;

• management of customer expectations concerning product capabilities and product life cycles;

• transition of customers to new product platforms;

• ability to attract and retain technical talent; and

• innovation that does not infringe on the intellectual property rights of third parties.

We may be subject to product recalls and warranty and product liability claims.

We invest significant resources in the design, manufacture and testing of our products. However, we may discover design or manufacturing defects inour products after they have been shipped and, as a result, we may incur development and remediation costs and be required to settle warranty and productliability claims. In addition, if any of our products contain defects or have reliability, quality or safety issues, we may need to conduct a product recall whichcould result in significant repair or replacement costs and substantial delays in product shipments and may damage our reputation which could make it moredifficult to sell our products. Any of these results could have a material adverse effect on our business, results of operations or financial condition.

If our suppliers do not meet product or delivery requirements, we could have reduced revenues and earnings.

Certain components, including semiconductor chips, may be in short supply from time to time because of high industry demand or the inability ofsome vendors to consistently meet our quality or delivery requirements. If any of our suppliers were to cancel contracts or commitments or fail to meet thequality or delivery requirements needed to satisfy customer orders for our products, we could lose time-sensitive customer orders, have significantlydecreased revenues and earnings and be subject to contractual penalties, which would have a material adverse effect on our business, results of operationsand financial condition. In addition, we rely on contract manufacturers for certain subsystems used in our products, and our ability to meet customer ordersfor those products depends upon the timeliness and quality of the work performed by these subcontractors, over whom we do not exercise any control.

To a certain extent, we are dependent upon the ability of our suppliers and contractors to help meet increased product or delivery requirements. It maybe difficult for certain suppliers to meet delivery requirements in a period of rapid growth, therefore impacting our ability to meet our customers’ demands.

We rely on the financial strength of our suppliers. There can be no assurance that the loss of suppliers either as a result of financial viability,bankruptcy or otherwise will not have a material adverse effect on our business, results of operations or financial condition.

14

Table of Contents

Our operations may be adversely impacted if our outsourced contract manufacturers or service providers fail to perform.

We depend on Flex Ltd. (“Flex”) to manufacture and test our FLEX and J750 family of products from its facility in China and on other contractmanufacturers to manufacture other products. If for any reason these contract manufacturers cannot provide us with these products in a timely fashion, or atall, we may not be able to sell these products to our customers until we enter a similar arrangement with an alternative contract manufacturer. If weexperience a problem with our supply of products from Flex or our other contract manufacturers, it may take us significant time to either manufacture theproduct or find an alternate contract manufacturer, which could result in substantial expense and disruption to our business.

We have also outsourced certain general and administrative functions to reputable service providers, many of which are in foreign countries,sometimes impacting communication with them because of language and time differences. Their presence in foreign countries also increases the risk theycould be exposed to political risk. Additionally, there may be difficulties encountered in coordinating the outsourced operations with existing functions andoperations. If we fail in successfully coordinating and managing the outsourced service providers, it may cause an adverse effect on our operations whichcould have a material adverse effect on our business, results of operations or financial condition.

We may not fully realize the benefits of our acquisitions or strategic alliances.

In June 2015, we acquired Universal Robots, and, in 2018, we acquired Energid and MiR. We may not be able to realize the benefit of acquiring orsuccessfully growing these businesses. We may continue to acquire additional businesses, form strategic alliances or create joint ventures with third partiesthat we believe will complement or augment our existing businesses. We may not be able to realize the expected synergies and cost savings from theintegration with our existing operations of other businesses or technologies that we may acquire. In addition, the integration process for our acquisitions maybe complex, costly and time consuming and include unanticipated issues, expenses and liabilities. We may have difficulty in developing, manufacturing andmarketing the products of a newly acquired company in a manner that enhances the performance of our combined businesses or product lines and allows usto realize value from expected synergies. Following an acquisition, we may not achieve the revenue or net income levels that justify the acquisition.Acquisitions may also result in one-time charges (such as acquisition-related expenses, write-offs or restructuring charges) or in the future, impairment ofgoodwill or acquired intangible assets that adversely affect our operating results. Additionally, we may fund acquisitions of new businesses, strategicalliances or joint ventures by utilizing our cash, incurring debt, issuing shares of our common stock, or by other means.

We may incur significant liabilities if we fail to comply with environmental regulations.

We are subject to both domestic and international environmental regulations and statutory strict liability relating to the use, storage, discharge, sitecleanup and disposal of hazardous chemicals used in our manufacturing processes. If we fail to comply with present and future regulations, or are requiredto perform site remediation, we could be subject to future liabilities or cost, including penalties or the suspension of production. Present and futureregulations may also:

• restrict our ability to expand facilities;

• restrict our ability to ship certain products;

• require us to modify our operations logistics;

• require us to acquire costly equipment; or

• require us to incur other significant costs and expenses.

15

Table of Contents

Pursuant to present regulations and agreements, we are conducting groundwater and subsurface assessment and monitoring and are implementingremediation and corrective action plans for facilities located in Massachusetts and New Hampshire which are no longer conducting manufacturingoperations. As of December 31, 2018, we have not incurred material costs as a result of the monitoring and remediation steps taken at the Massachusetts andNew Hampshire sites.

On January 27, 2003, the European Union adopted the following directives: (i) the directive on the Restriction of the Use of Certain HazardousSubstances in Electrical and Electronic Equipment (the “RoHS Directive”); and (ii) the directive on Waste Electrical and Electronic Equipment (the “WEEEDirective”). The WEEE Directive became effective August 13, 2005 and the RoHS Directive became effective on July 6, 2006. Both the RoHS Directiveand the WEEE Directive alter the form and manner in which electronic equipment is imported, sold and handled in the European Union. Other jurisdictions,such as China, have followed the European Union’s lead in enacting legislation with respect to hazardous substances and waste removal. Ensuringcompliance with the RoHS Directive, the WEEE Directive and similar legislation in other jurisdictions, and integrating compliance activities with oursuppliers and customers could result in additional costs and disruption to operations and logistics and thus, could have a negative impact on our business,operations or financial condition.

We currently are, and in the future may be, subject to litigation or regulatory proceedings that could have an adverse effect on our business.

From time to time, we may be subject to litigation or other administrative, regulatory or governmental proceedings, including tax audits and resultingclaims that could require significant management time and resources and cause us to incur expenses and, in the event of an adverse decision, pay damagesor incur costs in an amount that could have a material adverse effect on our financial position or results of operations.

Third parties may claim we are infringing their intellectual property and we could suffer significant litigation costs, licensing expenses or be preventedfrom selling our products.

We have been sued for patent infringement in the past and receive notifications from time to time that we may be in violation of patents held byothers. An assertion of patent infringement against us, if successful, could have a material adverse effect on our ability to sell our products or it could forceus to seek a license to the intellectual property rights of others or alter such products so that they no longer infringe the intellectual property rights of others.A license could be very expensive to obtain or may not be available at all. Similarly, changing our products or processes to avoid infringing the rights ofothers may be costly or impractical. Additionally, patent litigation could require a significant use of management resources and involve a lengthy andexpensive defense, even if we eventually prevail. If we do not prevail, we might be forced to pay significant damages, obtain licenses, modify our products,or stop making our products; each of which could have a material adverse effect on our financial condition, operating results or cash flows.

If we are unable to protect our intellectual property (“IP”), we may lose a valuable asset or may incur costly litigation to protect our rights.

We protect the technology that is incorporated in our products in several ways, including through patent, copyright, trademark and trade secretprotection and by contractual agreement. However, even with these protections, our IP may still be challenged, invalidated or subject to other infringementactions. While we believe that our IP has value in the aggregate, no single element of our IP is in itself essential. If a significant portion of our IP isinvalidated or ineffective, our business could be materially adversely affected.

16

Table of Contents

We may incur higher tax rates than we expect and may have exposure to additional international tax liabilities and costs.

We are subject to paying income taxes in the United States and various other countries where we operate. Our effective tax rate is dependent on whereour earnings are generated and the tax regulations and the interpretation and judgment of administrative tax or revenue entities in the United States and othercountries. We have pursued a global tax strategy which could be adversely affected by the mix of earnings and tax rates in the countries where we operate,changes to tax laws, tax regulations or an adverse tax ruling by administrative entities. We are also subject to tax audits in the countries where we operate.Any material change in our tax liability resulting from changes in tax laws, tax regulations, administrative ruling or from an audit from an administrative taxor revenue entity could negatively affect our financial results.

As a multinational corporation, we are subject to income taxes as well as non-income based taxes, in both the United States and various foreignjurisdictions. In certain foreign jurisdictions, we qualify for tax incentives and tax holidays based on our ability to meet, on a continuing basis, various testsrelating to our employment levels, research and development expenditures and other qualification requirements in a particular foreign jurisdiction. While weintend to operate in such a manner to maintain and maximize our tax incentives, no assurance can be given that we have so qualified or that we will soqualify for any particular year or jurisdiction. If we fail to qualify and to remain qualified for certain foreign tax incentives and tax holidays, we may besubject to further taxation or an increase in our effective tax rate which would adversely impact our financial results. In December 2015, we entered into anagreement with the Singapore Economic Development Board which extended our Singapore tax holiday under substantially similar terms to the agreementwhich expired on December 31, 2015. The new tax holiday is scheduled to expire on December 31, 2020. The tax savings attributable to the Singapore taxholiday for the years ended December 31, 2018, 2017 and 2016 were $11.9 million or $0.06 per diluted share, $24.8 million or $0.12 per diluted share and$17.0 million or $0.08 per diluted share, respectively. These tax savings may not be achievable in subsequent years due to changes in Singapore’s tax lawsor the expiration of the tax holiday.

In addition, we may incur additional costs, including headcount expenses, in order to maintain or obtain a foreign tax incentive in a particular foreignjurisdiction.

We have significant guarantees, indemnification and customer confidentiality obligations.

From time to time, we make guarantees to customers regarding the delivery, price and performance of our products and guarantee certainindebtedness, performance obligations or lease commitments of our subsidiary and affiliate companies. We also have agreed to provide indemnification toour officers, directors, employees and agents, to the extent permitted by law, arising from certain events or occurrences while the officer, director, employeeor agent, is or was serving at our request in such capacity. Additionally, we have confidentiality obligations to certain customers and if breached wouldrequire the payment of significant penalties. If we become liable under any of these obligations, it could materially and adversely affect our business,financial condition or operating results. For additional information see Note K: “Commitments and Contingencies—Guarantees and IndemnificationObligations” in Notes to Consolidated Financial Statements.

We may discontinue or reduce our quarterly cash dividend or share repurchase program.

In January 2014, our Board of Directors initiated a quarterly cash dividend of $0.06 per share. In January 2017, our Board of Directors increased ourquarterly cash dividend to $0.07 per share and in January 2018, our Board of Directors increased our quarterly cash dividend to $0.09 per share. In January2018, our Board of Directors approved a new $1.5 billion share repurchase authorization. In 2018 and 2017, we repurchased $823 million and $200 millionof common stock, respectively. We intend to repurchase $500 million in 2019. Holders of our common stock are only entitled to receive dividends when andif they are declared by our Board of Directors. Future cash dividends and share repurchases are subject to the discretion of our Board of Directors

17

Table of Contents

and will depend, among other things, upon our earnings, capital requirements and financial condition. While we have declared a quarterly cash dividend onour common stock and authorized a share repurchase program, we are not required to do either and may reduce or eliminate our cash dividend or sharerepurchase program in the future. The reduction or elimination of our cash dividend or our share repurchase program could adversely affect the market priceof our common stock.

We have incurred indebtedness and may incur additional indebtedness.

On December 12, 2016, we completed a private offering of $460.0 million aggregate principal amount of 1.25% convertible senior unsecured notes(the “Notes”) due December 15, 2023 and received net proceeds, after issuance costs, of approximately $450.8 million, $33.0 million of which was used topay the net cost, after being partially offset by proceeds from the sale of the warrants, of the convertible note hedge transactions and $50.1 million of whichwas used to repurchase 2 million shares of our common stock. Holders of the Notes may require us to repurchase the Notes upon the occurrence of certainfundamental changes involving us or the holders may elect to convert into shares of our common stock.

On April 27, 2015, we entered into a five-year, senior secured revolving credit facility of up to $350.0 million. Subject to customary conditions, wemay seek to obtain from existing or new lenders incremental commitments under the credit facility in an aggregate principal amount not to exceed$150.0 million. We have not borrowed any funds under this credit facility. We could borrow funds under this credit facility at any time for general corporatepurposes and working capital.

The issuance of the Notes and any additional indebtedness, among other things, could:

• make it difficult to make payments on this indebtedness and our other obligations;

• make it difficult to obtain any necessary future financing for working capital, capital expenditures, debt service requirements or other purposes;

• require the dedication of a substantial portion of any cash flow from operations to service for indebtedness, thereby reducing the amount of cash

flow available for other purposes, including capital expenditures; and

• limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we compete.

Our convertible note hedge and warrant transactions could impact the value of our stock.

Concurrent with the offering of the Notes, we entered into convertible note hedge transactions (the “Note Hedge Transactions”) with the initialpurchasers or their affiliates (the “Option Counterparties”). The Note Hedge Transactions cover, subject to customary anti-dilution adjustments, the numberof shares of our common stock that underlie the Notes, with a strike price equal to the conversion price of the Notes of $31.70. The Note HedgeTransactions cover, subject to customary anti-dilution adjustments, approximately 14.5 million shares of our common stock.

Separately and concurrent with the pricing of the Notes, we entered into warrant transactions with the Option Counterparties (the “WarrantTransactions”) in which we sold net-share-settled (or, at our election subject to certain conditions, cash-settled) warrants to the Option Counterparties. TheWarrant Transactions cover, subject to customary anti-dilution adjustments, approximately 14.5 million shares of our common stock. The strike price of thewarrants is $39.78 per share. The Warrant Transactions could have a dilutive effect to our common stock to the extent that the market price per share of ourcommon stock, as measured under the terms of the Warrant Transactions, exceeds the applicable strike price of the warrants.

18

Table of Contents

The Note Hedge Transactions are expected to reduce the potential dilution to our common stock upon any conversion of the Notes. However, theWarrant Transactions could separately have a dilutive effect to the extent that the market value per share of our common stock exceeds the applicable strikeprice of the warrants. The net cost of the Note Hedge Transactions, after being partially offset by the proceeds from the sale of the warrants, wasapproximately $33.0 million.

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

We may not be able to pay our debt and other obligations.

If our cash flow is inadequate to meet our obligations, we could face substantial liquidity problems. If we are unable to generate sufficient cash flowor otherwise obtain funds necessary to make required payments on the Notes or certain of our other obligations, we would be in default under the termsthereof, which would permit the holders of those obligations to accelerate their maturity and also could cause defaults under future indebtedness we mayincur. Any such default could have a material adverse effect on our business, prospects, financial position and operating results. In addition, we cannot becertain that we would be able to repay amounts due on the Notes if those obligations were to be accelerated following the occurrence of any other event ofdefault as defined in the instruments creating those obligations, or if the holders of the Notes require us to repurchase the Notes upon the occurrence of afundamental change involving us. Moreover, we cannot be certain that we will have sufficient funds or will be able to arrange for financing to pay theprincipal amount due on the Notes at maturity.

Restrictive covenants in the agreement governing our senior secured revolving credit facility may restrict our ability to pursue business strategies.

The agreement governing our senior secured revolving credit facility limits our ability, among other things, to: incur additional secured indebtedness;sell, transfer, license or dispose of assets; consolidate or merge; enter into transactions with our affiliates; and incur liens. In addition, our senior securedrevolving credit facility contains financial and other restrictive covenants that limit our ability to engage in activities that may be in our long term bestinterest, such as, subject to permitted exceptions, making capital expenditures in excess of certain thresholds, making investments, loans and other advances,and prepaying any additional indebtedness while our indebtedness under our senior secured revolving credit facility is outstanding. Our failure to complywith financial and other restrictive covenants could result in an event of default, which if not cured or waived, could result in the lenders requiringimmediate payment of all outstanding borrowings or foreclosing on collateral pledged to them to secure the indebtedness.

Our business may suffer if we are unable to attract and retain key employees.

Competition for employees with skills we require is intense in the high technology industry. Our success will depend on our ability to attract andretain key technical employees. The loss of one or more key or other employees, a decrease in our ability to attract additional qualified employees, or thedelay in hiring key personnel could each have a material adverse effect on our business, results of operations or financial condition.

19

Table of Contents

Our operations, and the operations of our customers and suppliers, are subject to risks of natural catastrophic events, widespread health epidemics, actsof war, terrorist attacks and the threat of domestic and international terrorist attacks, any one of which could result in cancellation of orders, delays indeliveries or other business activities, or loss of customers and could negatively affect our business and results of operations.

Our business is international in nature, with our sales, service and administrative personnel and our customers and suppliers located in numerouscountries throughout the world. Our operations, and those of our customers and suppliers, are subject to disruption for a variety of reasons, including workstoppages, acts of war, terrorism, health epidemics, fires, earthquakes, hurricanes, volcanic eruptions, energy shortages, telecommunication failures,tsunamis, flooding or other natural disasters. Such disruption could materially increase our costs and expenses as well as cause delays in, among otherthings, shipments of products to our customers, our ability to perform services requested by our customers, or the installation and acceptance of our productsat customer sites. Any of these conditions could have a material adverse effect on our business, financial condition or results of operations.

A breach of our operational or security systems could negatively affect our business and results of operations.

We rely on various information technology networks and systems, some of which are managed by third parties, to process, transmit and storeelectronic information, including confidential data, and to carry out and support a variety of business activities, including manufacturing, research anddevelopment, supply chain management, sales and accounting. A failure in or a breach of our operational or security systems or infrastructure, or those ofour suppliers and other service providers, including as a result of cyber attacks, could disrupt our business, result in the disclosure or misuse of proprietaryor confidential information, damage our reputation, cause losses and increase our costs.

We may face risks associated with shareholder activism.

Publicly traded companies have increasingly become subject to campaigns by shareholders advocating corporate actions such as financialrestructuring, increased borrowing, special dividends, stock repurchases or divestitures. We may become subject in the future to such shareholder activityand demands. Such activities could interfere with our ability to execute our business plans, be costly and time-consuming, disrupt our operations, divert theattention of management or result in our initiating borrowing or increasing our share repurchase plan or dividend, any of which could have an adverse effecton our business or stock price.

Provisions of our charter and by-laws and Massachusetts law may make a takeover of Teradyne more difficult.

There are provisions in our basic corporate documents and under Massachusetts law that could discourage, delay or prevent a change in control, evenif a change in control may be regarded as beneficial to some or all of our stockholders. Item 1B: Unresolved Staff Comments

None.

20

Table of Contents

Item 2: Properties

The following table provides information as to our principal facilities:

Location Operating Segment Major

Activity (1)

ApproximateSquare Feet of

Floor Space Properties owned:

North Reading, Massachusetts Semiconductor Test & System Test 1-2-3-4-5 422,000 Agoura Hills, California Semiconductor Test 3-4 120,000 Kumamoto, Japan Semiconductor Test 2-3-4-5 60,300

602,300 Properties leased:

Odense, Denmark Industrial Automation 2-3-4-5 247,000 Cebu, Philippines Semiconductor Test 1-2-5 209,000 San Jose, California Semiconductor Test & Wireless Test 2-3-4-5 185,700 Shanghai, China

Semiconductor Test, System Test, WirelessTest & Industrial Automation 3-4-5 103,000

Buffalo Grove, Illinois Semiconductor Test 2-3-4-5 95,000 Sunnyvale, California Wireless Test & Semiconductor Test 2-3-4-5 71,300 Heredia, Costa Rica Semiconductor Test 1-5 63,000 Hsinchu, Taiwan Semiconductor Test & System Test 4 43,000 Seoul, Korea Semiconductor Test & Industrial Automation 4 34,000 Singapore, Singapore Semiconductor Test & Industrial Automation 1-3-4 32,700

1,083,700 (1) Major activities have been separated into the following categories: 1. Corporate Administration, 2. Manufacturing, 3. Engineering, 4. Sales and

Marketing, 5. Storage and Distribution. Item 3: Legal Proceedings

We are subject to legal proceedings, claims and investigations that arise in the ordinary course of business such as, but not limited to, patent,employment, commercial and environmental matters. We believe that we have meritorious defenses against all pending claims and intend to vigorouslycontest 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, webelieve the potential losses associated with all of these actions are unlikely to have a material adverse effect on our results of operations, financial conditionor cash flows. Item 4: Mine Safety Disclosure

Not Applicable.

21

Table of Contents

PART II Item 5: Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

Our common stock is traded on the Nasdaq Global Select Market under the trading symbol “TER”. Before November 27, 2018, our common stocktraded on the New York Stock Exchange.

See “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for information on the frequency andamounts of our quarterly cash dividends, equity compensation plans and performance graph.

The following table includes information with respect to repurchases we made of our common stock during the three months ended December 31,2018 (in thousands except per share price):

Period

(a) TotalNumber of

Shares(or Units)Purchased

(b) AveragePrice Paid perShare (or Unit)

(c) Total Number ofShares (or Units)

Purchased as Part ofPublicly AnnouncedPlans or Programs

(d) Maximum Number(or

Approximate DollarValue) of Shares (orUnits) that may Yet

BePurchased Under the

Plans or Programs October 1, 2018 – October 28, 2018 3,115 $ 33.87 3,113 $ 832,309 October 29, 2018 – November 25, 2018 2,386 $ 34.54 2,383 $ 750,000 November 26, 2018 – December 31, 2018 2,300 $ 31.95 2,300 $ 676,522

7,801(1) $ 33.51(1) 7,796

(1) Includes approximately five thousand shares at an average price of $36.24 withheld from employees for the payment of taxes.

We satisfy U.S. federal and state minimum withholding tax obligations due upon the vesting and the conversion of restricted stock units into shares ofour common stock, by automatically withholding from the shares being issued, a number of shares with an aggregate fair market value on the date of suchvesting and conversion that would satisfy the minimum withholding amount due. Item 6: Selected Financial Data Years Ended December 31, 2018 2017 2016 2015 2014 (dollars in thousands, except per share amounts) Consolidated Statement of Operations Data (1)(2)(3)(4)(5):

Revenues $2,100,802 $2,136,606 $1,753,250 $ 1,639,578 $ 1,647,824

Net income (loss) $ 451,779 $ 257,692 $ (43,421) $ 206,477 $ 81,272

Net income (loss) per common share-basic $ 2.41 $ 1.30 $ (0.21) $ 0.98 $ 0.40

Net income (loss) per common share-diluted $ 2.35 $ 1.28 $ (0.21) $ 0.97 $ 0.37

Cash dividend declared per common share $ 0.36 $ 0.28 $ 0.24 $ 0.24 $ 0.18

Consolidated Balance Sheet Data: Total assets $2,706,606 $3,109,545 $2,762,493 $ 2,548,674 $ 2,538,520

Long-term debt obligations $ 379,981 $ 365,987 $ 352,669 $ — $ —

(1) The year ended December 31, 2018 includes $49.5 million of tax benefit related to the finalization of the U.S. transition tax liability, $3.3 million of

pension actuarial gains, and the results of operations of Mobile Industrial Robots and Energid from April 25, 2018 and February 26, 2018,respectively.

22

Table of Contents

(2) The year ended December 31, 2017 includes $186.0 million of provisional tax expense related to the Tax Reform Act and $6.6 million of pensionactuarial gains.

(3) The year ended December 31, 2016 includes a $254.9 million goodwill impairment charge and an $83.3 million acquired intangible assets impairmentcharge related to the Wireless Test segment, and $3.2 million of pension actuarial gains.

(4) The year ended December 31, 2015 includes $17.7 million of pension actuarial losses, a $5.4 million gain from the sale of an equity investment andthe results of operations of Universal Robots from June 12, 2015.

(5) The year ended December 31, 2014 includes a $98.9 million goodwill impairment charge related to the Wireless Test segment and $46.6 million ofpension actuarial losses.

Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are a leading global supplier of automation equipment for test and industrial applications. We design, develop, manufacture and sell automatic testsystems used to test semiconductors, wireless products, data storage and complex electronics systems in the consumer electronics, wireless, automotive,industrial, computing, communications, and aerospace and defense industries. Our industrial automation products include collaborative robotic arms,autonomous mobile robots and advanced robotic control software used by global manufacturing and light industrial customers to improve quality, increasemanufacturing and material handling efficiency and decrease manufacturing costs. Our automatic test equipment and industrial automation products andservices include:

• semiconductor test (“Semiconductor Test”) systems;

• defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, storage test (“Storage Test”) systems, and circuit-board test and

inspection (“Production Board Test”) systems (collectively these products represent “System Test”);

• industrial automation (“Industrial Automation”) products; and

• wireless test (“Wireless Test”) systems.

We have a customer base which includes integrated device manufacturers (“IDMs”), outsourced semiconductor assembly and test providers(“OSATs”), original equipment manufacturers (“OEMs”), wafer foundries, fabless companies that design, but contract with others for the manufacture ofintegrated circuits (“ICs”), developers of wireless devices and consumer electronics, manufacturers of circuit boards, automotive suppliers, wireless productmanufacturers, storage device manufacturers, aerospace and military contractors, and distributors that sell collaborative robots, autonomous mobile robotsand wireless test systems.

The market for our test products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchasesof test equipment. One customer drives significant demand for our products both through direct sales and sales to the customer’s supply partners. We expectthat sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future.

The sales of our products and services are dependent, to a large degree, on customers who are subject to cyclical trends in the demand for theirproducts. These cyclical periods have had, and will continue to have, a significant effect on our business because our customers often delay or acceleratepurchases in reaction to changes in their businesses and to demand fluctuations in the semiconductor and electronics industries. Historically, these demandfluctuations have resulted in significant variations in our results of operations. During the first quarter of 2018, demand outlook for mobile device testcapacity in 2018 declined sharply for our Semiconductor Test business. Demand in other segments of the Semiconductor Test business, including memorytest, increased in 2018.

23

Table of Contents

In 2015, we acquired Universal Robots A/S (“Universal Robots”), the leading supplier of collaborative robots which are low-cost, easy-to-deploy andsimple-to-program robots that work side by side with production workers to improve quality, increase manufacturing efficiency and decrease manufacturingcosts. The acquisition of Universal Robots provides a growth engine to our business. The total purchase price for Universal Robots was approximately$315 million, which included cash paid of approximately $284 million and $32 million in fair value of contingent consideration payable upon achievementof revenue and earnings targets through 2018. Contingent consideration for 2015 was $15 million and was paid in February 2016. Contingent considerationfor the period from July 2015 to December 2017 was $24.6 million and was paid March 2018. Contingent consideration for the period from July 2015 toDecember 2018 was $3.9 million and it is expected to be paid in March 2019.

On February 26, 2018, we acquired Energid Technologies Corporation (“Energid”) for a total purchase price of approximately $27.6 million.Energid’s technology enables and simplifies the programming of complex robotic motions used in a wide variety of end markets, ranging from heavyindustry to healthcare, utilizing both traditional robots and collaborative robots.

On April 25, 2018, we acquired Mobile Industrial Robots ApS (“MiR”), a Danish limited liability company. MiR is the leading maker of collaborativeautonomous mobile robots for industrial applications. The total purchase price was approximately $198 million, which included cash paid of approximately$145 million and $53 million in fair value of contingent consideration payable upon achievement of certain thresholds and targets for revenue and earningsbefore interest and taxes through 2020. At December 31, 2018, the maximum amount of contingent consideration that could be paid is $115 million.Contingent consideration for 2018 was $31.0 million and is expected to be paid in March 2019.

Universal Robots, MiR and Energid are included in our Industrial Automation segment.

We believe our recent acquisitions have enhanced our opportunities for growth. We intend to continue to invest in our business, grow market share inour markets and expand further our addressable markets while tightly managing our costs.

Critical Accounting Policies and Estimates

We have identified the policies discussed below as critical to understanding our business and our results of operations and financial condition. Theimpact and any associated risks related to these policies on our business operations is discussed throughout Management’s Discussion and Analysis ofFinancial Condition and Results of Operations where such policies affect our reported and expected financial results.

Revenue from Contracts with Customers

We adopted Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” on January 1, 2018 using the modifiedretrospective method for all contracts not completed as of the date of adoption. The reported results for 2018 reflect the application of ASC 606 while thereported results for 2017 were prepared under the guidance of ASC 605, “Revenue Recognition,” which is also referred to herein as “Legacy GAAP” or the“previous guidance.” We recorded a net increase to retained earnings of $12.7 million as of January 1, 2018 due to the cumulative impact of adopting ASC606. The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of Teradyne’shardware and services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when oras a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which Teradyne expects to beentitled to receive in exchange for fulfillment of the performance obligation. Teradyne’s primary source of revenue will continue to be from the sale ofsystems, instruments, robots, and the delivery of services.

24

Table of Contents

In accordance with ASC 606, we recognize revenues, when or as control is transferred to a customer. Our determination of revenue is dependent upona five step process outlined below.

Step 1: Identify the contract with the customer

We account for a contract with a customer when there is written approval, the contract is committed, the rights of the parties, including paymentterms, are identified, the contract has commercial substance and consideration is probable of collection.

Step 2: Identify the performance obligations in the contract

We periodically enter into contracts with customers in which a customer may purchase a combination of goods and services, such as products withextended warranty obligations. We determine performance obligations by assessing whether the products or services are distinct from the other elements ofthe 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 thecontext of the contract.

Step 3: Determine the transaction price

We consider the amount stated on the face of the purchase order to be the transaction price. We do not have variable consideration which could impactthe stated purchase price agreed to by us and the customer.

Step 4: Allocate the transaction price to the performance obligations in the contract

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

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

In order to determine the appropriate timing for revenue recognition, we first determine if the transaction meets any of three criteria for over timerecognition. If the transaction meets the criteria for over time recognition, we recognize revenue as the good or service is delivered. We use input variablessuch 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 bestalign consumption with benefit to the customer. For transactions that do not meet the criteria for over time recognition, we will recognize revenue at a pointin time based on an assessment of the five criteria for transfer of control. We have concluded that revenue should be recognized when shipped or deliveredbased on contractual terms. Typically acceptance of our products and services is a formality as we deliver similar systems, instruments and robots tostandard specifications. In cases where acceptance is not deemed a formality, we will defer revenue recognition until customer acceptance.

Translation of Non-U.S. Currencies

The functional currency for all non-U.S. subsidiaries is the U.S. dollar, except for the Industrial Automation segment for which the local currency isits functional currency. All foreign currency denominated monetary assets and liabilities are remeasured on a monthly basis into the functional currencyusing exchange rates in effect at the end of the period. All foreign currency denominated non-monetary assets and liabilities are remeasured into thefunctional currency using historical exchange rates. Net foreign exchange gains and losses resulting from remeasurement are included in other (income)expense, net. For Industrial Automation, 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 withinaccumulated other comprehensive income (loss).

25

Table of Contents

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 occuror 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 andlosses are generally measured annually as of December 31 and, accordingly, recorded during the fourth quarter of each year or upon any interimremeasurement of the plans.

In March 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-07, “Compensation—Retirement Benefits (Topic 715):Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” We retrospectively adopted the new accountingguidance on presentation of net periodic pension costs and net periodic postretirement benefit costs in the first quarter of 2018. This guidance requires theservice cost component of net benefit costs to be reported in the same line item in the consolidated statement of operations as other employee compensationcosts. The non-service components of net benefit costs such as interest cost, expected return on assets, amortization of prior service cost, and actuarial gainsor losses, are required to be reported separately outside of income or loss from operations. Following the adoption of this guidance, we continue to recordthe service cost component in the same line item as other employee compensation costs and the non-service components of net benefit costs such as interestcost, expected return on assets, amortization of prior service cost, and actuarial gains or losses are reported within other (income) expense, net. In 2017 and2016, the retrospective adoption of this standard decreased income from operations by $5.0 million and $3.0 million, respectively, due to the reclass of netactuarial pension gains and increased non-operating (income) expense by the same amount with no impact to net income (loss).

Inventories

Inventories are stated at the lower of cost (first-in, first-out basis) or net realizable value. On a quarterly basis, we use consistent methodologies toevaluate all inventories for net realizable value. We record a provision for both excess and obsolete inventory when such write-downs or write-offs areidentified through the quarterly review process. The inventory valuation is based upon assumptions about future demand, product mix, and possiblealternative uses.

Equity Incentive and Stock Purchase Plans

Stock-based compensation expense is based on the grant-date fair value estimated in accordance with the provisions of ASC 718, “Compensation—Stock Compensation.” Upon adoption of ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based PaymentAccounting,” in the first quarter of 2017, we made an accounting policy election to continue accounting for forfeitures by applying an estimated forfeiturerate and recognizing compensation costs only for those stock-based compensation awards expected to vest. In accordance with ASU 2016-09, starting in thefirst quarter of 2017, excess tax benefits or tax deficiencies are recognized as a discrete tax benefit or discrete tax expense to the current income taxprovision in our consolidated statements of operations and are reported as cash flows from operating activities. On January 1, 2017, a cumulative effectadjustment of $39.1 million for any prior year excess tax benefits or tax deficiencies not previously recorded was recorded as an increase to retainedearnings and deferred tax assets. All cash payments made to taxing authorities on the employees’ behalf for withheld shares are presented as financingactivities on the statement of cash flows. In 2018 and 2017, we recognized a discrete tax benefit of $7.6 million and $6.3 million, respectively, related to netexcess tax benefit.

Income Taxes

Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and aremeasured 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 isreduced by a valuation allowance

26

Table of Contents

if it is more likely than not that some or all of the deferred tax assets will not be realized. We performed the required assessment of positive and negativeevidence regarding the realization of the net deferred tax assets in accordance with ASC 740, “Accounting for Income Taxes.” This assessment included theevaluation of scheduled reversals of deferred tax liabilities, estimates of projected future taxable income and tax-planning strategies. Although realization isnot 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.

Investments

We account for our investments in debt and equity securities in accordance with the provisions of ASC 320-10, “Investments—Debt and EquitySecurities.” On a quarterly basis, we review our investments to identify and evaluate those that have an indication of a potential other-than-temporaryimpairment. 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.

Financial Assets and Financial Liabilities

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of FinancialAssets and Financial Liabilities.” We adopted the new accounting guidance in the first quarter of 2018 using the modified retrospective approach. Thisguidance requires that changes in fair value of equity marketable securities be accounted for directly in earnings. Previously, the changes in fair value ofequity marketable securities were recorded in accumulated other comprehensive income on the balance sheet. We continue to record realized gains ininterest income and realized losses in interest expense. The adoption of this new accounting guidance increased the January 1, 2018 retained earningsbalance by $3.1 million and decreased the accumulated other comprehensive income balance by the same amount.

Goodwill, Intangible and Long-Lived Assets

We assess goodwill for impairment at least annually in the fourth quarter, as of December 31, on a reporting unit basis, or more frequently, whenevents and circumstances occur indicating that the recorded goodwill may be impaired. If the book value of a reporting unit exceeds its fair value, theimplied fair value of goodwill is compared with the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, animpairment charge is recorded in an amount equal to that excess.

In the second quarter of 2016, the Wireless Test reporting unit (which is our Wireless Test operating and reportable segment) reduced headcount by11% as a result of a sharp decline in projected demand attributable to an estimated smaller future wireless test market. The decrease in projected demandwas due to lower forecasted buying from our largest Wireless Test segment customer (who had previously contributed between 51% and 73% of annualWireless Test sales since the LitePoint acquisition in 2011) as a result of the customer’s numerous operational efficiencies; slower smartphone growth rates;and a slowdown of new wireless technology adoption. We considered the headcount reduction and sharp decline in projected demand to be a triggeringevent for an interim goodwill impairment test. Following the interim goodwill impairment test, we recorded a goodwill impairment charge of$254.9 million, with approximately $8.0 million of goodwill remaining.

No goodwill impairment was identified in the fourth quarter of 2018, 2017, and 2016, as part of the annual goodwill impairment test.

27

Table of Contents

We assess the impairment of intangible and long-lived assets whenever events or changes in circumstances indicate that the carrying value may not berecoverable. Factors we consider important in the determination of an impairment include significant underperformance relative to historical or projectedfuture operating results, significant changes in the manner that we use the acquired asset and significant negative industry or economic trends.

As a result of the interim goodwill impairment test in the second quarter of 2016 described above, we performed an impairment test of the WirelessTest segment’s intangible and long-lived assets based on the comparison of the estimated undiscounted cash flows to the recorded value of the assets andrecorded an $83.3 million acquired intangible assets impairment charge, with approximately $2.2 million of intangible assets remaining at December 31,2018. There were no events or circumstances indicating that the carrying value of acquired intangible and long-lived assets may not be recoverable in 2018and 2017; as such no impairment test was performed. When we determine that the carrying value of intangible and long-lived assets may not be recoverablebased upon the existence of one or more of the above indicators of impairment, we measure any impairment based on a projected discounted cash flowmethod using a discount rate commensurate with the associated risks.

Results of Operations

The following table sets forth the percentage of total net revenues included in our consolidated statements of operations: Years Ended December 31, 2018 2017 2016 Percentage of revenues: Revenues:

Products 82.3% 83.5% 82.9% Services 17.7 16.5 17.1

Total revenues 100.0 100.0 100.0 Cost of revenues:

Cost of products 34.6 35.6 37.6 Cost of services 7.3 7.2 7.7

Total cost of revenues (exclusive of acquired intangible assets amortization shown separatelybelow) 41.9 42.8 45.3

Gross profit 58.1 57.2 54.7 Operating expenses:

Selling and administrative 18.6 16.3 18.1 Engineering and development 14.4 14.4 16.7 Acquired intangible assets amortization 1.9 1.4 3.0 Restructuring and other 0.7 0.4 1.3 Goodwill impairment — — 14.5 Acquired intangible assets impairment — — 4.8

Total operating expenses 35.5 32.6 58.3

Income (loss) from operations 22.6 24.6 (3.6) Non-operating (income) expenses:

Interest income (1.3) (0.8) (0.5) Interest expense 1.5 1.0 0.2 Other (income) expense, net 0.1 (0.1) (0.1)

Income (loss) before income taxes 22.3 24.5 (3.1) Income tax provision (benefit) 0.8 12.5 (0.7)

Net income (loss) 21.5% 12.1% (2.5)%

28

Table of Contents

Revenues

Revenues for our reportable segments were as follows:

2018 2017 2016

2017-2018

DollarChange

2016-2017Dollar

Change (in millions) Semiconductor Test $1,492.4 $1,662.5 $1,368.2 $ (170.1) $ 294.3 Industrial Automation 261.5 170.1 99.0 91.4 71.1 System Test 216.1 192.1 189.8 24.0 2.3 Wireless Test 132.0 111.9 96.2 20.1 15.7 Corporate and Other (1.2) — — (1.2) —

$2,100.8 $2,136.6 $1,753.3 $ (35.8) $ 383.3

The decrease in Semiconductor Test revenues of $170.1 million, or 10%, from 2017 to 2018 was driven primarily by a decrease in sales in themobility and microcontroller test segments, partially offset by increased sales in memory and analog test segments and an increase in service revenues. Theincrease in Semiconductor Test revenues of $294.3 million, or 22%, from 2016 to 2017 was driven primarily by increased sales in the microcontroller,power management, flash memory, and automotive safety test segments and an increase in service revenues.

The increase in Industrial Automation revenues of $91.4 million, or 54%, from 2017 to 2018 was due to higher demand for collaborative robotic armsand the acquisition of MiR, completed in April 2018. MiR added revenues of $24.1 million in 2018. The increase in Industrial Automation revenues of$71.1 million, or 72%, from 2016 to 2017 was due to higher demand for collaborative robotic arms.

The increase in System Test revenues of $24.0 million, or 12%, from 2017 to 2018 was primarily due to higher system sales in Production Board Testand higher sales of 3.5” hard disk drive and system level testers in Storage Test. The increase in System Test revenues of $2.3 million, or 1%, from 2016 to2017 was primarily due to higher service revenue in Defense/Aerospace test instrumentation and systems.

The increase in Wireless Test revenues of $20.1 million, or 18%, from 2017 to 2018 was primarily due to higher demand for next generation wirelessproducts. The increase in Wireless Test revenues of $15.7 million, or 16%, from 2016 to 2017 was primarily due to higher demand for connectivity testsystems and higher service revenue.

Our reportable segments accounted for the following percentages of consolidated revenues: 2018 2017 2016 Semiconductor Test 71% 78% 78% Industrial Automation 12 8 6 System Test 10 9 11 Wireless Test 6 5 5

100% 100% 100%

29

Table of Contents

Revenues by country as a percentage of total revenues were as follows (1): 2018 2017 2016 Taiwan 25% 32% 37% China 17 12 10 United States 13 12 13 Europe 11 8 7 Korea 8 10 8 Japan 8 8 8 Malaysia 6 6 6 Singapore 5 5 4 Philippines 4 5 3 Thailand 3 1 3 Rest of the World – 1 1

100% 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:

2018 2017 2016

2017-2018Dollar

Change

2016-2017Dollar

Change (in millions) Product revenues $1,729.6 $1,784.7 $1,453.2 $ (55.1) $ 331.5 Service revenues 371.2 351.9 300.0 19.3 51.9

$2,100.8 $2,136.6 $1,753.3 $ (35.8) $ 383.3

Our product revenues decreased $55.1 million, or 3%, in 2018 from 2017 primarily due to lower sales in Semiconductor Test mobility test segment,partially offset by higher sales in Industrial Automation, System Test and Wireless Test. Service revenues increased $19.3 million, or 5%.

Our product revenues increased $331.5 million, or 23%, in 2017 from 2016 primarily due to higher sales across all Semiconductor Test products andhigher sales in Industrial Automation. Service revenues, which are derived from the servicing of our installed base of products and include equipmentmaintenance contracts, repairs, extended warranties, parts sales, and applications support increased $51.9 million, or 17%.

In 2018, no single customer accounted for more than 10% of our consolidated revenues. In 2017 and 2016, revenues from one customer accounted for13% and 12%, respectively, of our consolidated revenues. In 2016, a different customer accounted for 12% of our consolidated revenues. In each of theyears, 2018, 2017, and 2016, our five largest customers in aggregate accounted for 27%, 32%, and 36%, respectively, of our consolidated revenues. Weestimate consolidated revenues driven by a single OEM customer, combining direct sales to that customer with sales to the customer’s OSATs, accounted forapproximately 13%, 22%, and 26% of our consolidated revenues in 2018, 2017, and 2016, respectively.

Gross Profit

2018 2017 2016

2017-2018Dollar /Point

Change

2016-2017Dollar /Point

Change (dollars in millions) Gross profit $1,220.4 $1,221.5 $958.6 $ (1.1) $ 262.9 Percent of total revenues 58.1% 57.2% 54.7% 0.9 2.5

30

Table of Contents

Gross profit as a percent of total revenues increased from 2017 to 2018 by 0.9 points, primarily due to favorable product mix in System Test,Semiconductor Test, and lower product costs in Industrial Automation.

Gross profit as a percent of total revenues increased from 2016 to 2017 by 2.5 points, as a result of a 1.5 point increase related to favorable productmix in Semiconductor Test and a 1.0 point increase due to higher sales primarily in Semiconductor Test and Industrial Automation.

The breakout of product and service gross profit was as follows:

2018 2017 2016

2017-2018Dollar /Point

Change

2016-2017Dollar /Point

Change (dollars in millions) Product gross profit $1,002.5 $1,023.7 $793.2 $ (21.2) $ 230.5 Percent of product revenues 58.0% 57.4% 54.6% 0.6 2.8

Service gross profit $ 217.9 $ 197.7 $165.4 $ 20.2 $ 32.3 Percent of service revenues 58.7% 56.2% 55.1% 2.5 1.1

We assess the carrying value of our inventory on a quarterly basis by estimating future demand and comparing that demand against on-hand and on-order inventory positions. Forecasted revenues information is obtained from the sales and marketing groups and incorporates factors such as backlog andfuture consolidated revenues. This quarterly process identifies obsolete and excess inventory. Obsolete inventory, which represents items for which there isno demand, is fully reserved. Excess inventory, which represents inventory items that are not expected to be consumed during the next twelve quarters forour Semiconductor Test, Industrial Automation and System Test segments and next four quarters for our Wireless Test segment, is written-down toestimated net realizable value.

During the year ended December 31, 2018, we recorded an inventory provision of $11.2 million included in cost of revenues, primarily due todownward revisions to previously forecasted demand levels for certain products. Of the $11.2 million of total excess and obsolete provisions, $6.8 millionwas related to Semiconductor Test, $2.5 million was related to Wireless Test, $1.2 million was related to System Test, and $0.7 million was related toIndustrial Automation.

During the year ended December 31, 2017, we recorded an inventory provision of $8.8 million included in cost of revenues, primarily due todownward revisions to previously forecasted demand levels for certain products. Of the $8.8 million of total excess and obsolete provisions, $4.6 millionwas related to Semiconductor Test, $2.2 million was related to Wireless Test, and $1.9 million was related to System Test.

During the year ended December 31, 2016, we recorded an inventory provision of $17.5 million included in cost of revenues, primarily due todownward revisions to previously forecasted demand levels. Of the $17.5 million of total excess and obsolete provisions, $9.7 million was related toSemiconductor Test, $7.2 million was related to Wireless Test, and $0.6 million was related to System Test.

During the years ended December 31, 2018, 2017 and 2016, we scrapped $7.0 million, $14.4 million and $15.2 million of inventory, respectively, andsold $6.7 million, $7.5 million and $10.0 million of previously written-down or written-off inventory, respectively. As of December 31, 2018, we hadinventory related reserves for amounts which had been written-down or written-off totaling $100.8 million. We have no pre-determined timeline to scrap theremaining inventory.

31

Table of Contents

Selling and Administrative

Selling and administrative expenses were as follows:

2018 2017 2016 2017-2018

Change 2016-2017

Change (dollars in millions) Selling and administrative $390.7 $348.9 $316.5 $ 41.8 $ 32.4 Percent of total revenues 18.6% 16.3% 18.1%

The increase of $41.8 million in selling and administrative expenses from 2017 to 2018 was due primarily to higher spending in IndustrialAutomation related to higher sales and marketing spending in Universal Robots and due to the acquisitions of MiR and Energid in 2018, partially offset bylower variable compensation across all segments.

The increase of $32.4 million in selling and administrative expenses from 2016 to 2017 was due primarily to higher variable compensation across allsegments and higher spending in Universal Robots, partially offset by lower spending in Wireless Test.

Engineering and Development

Engineering and development expenses were as follows:

2018 2017 2016 2017-2018

Change 2016-2017

Change (dollars in millions) Engineering and development $301.5 $307.3 $292.2 $ (5.8) $ 15.1 Percent of total revenues 14.4% 14.4% 16.7%

The decrease of $5.8 million in engineering and development expenses from 2017 to 2018 was due primarily to lower spending in System Test andSemiconductor Test, and lower variable compensation, partially offset by higher spending in Industrial Automation.

The increase of $15.1 million in engineering and development expenses from 2016 to 2017 was due primarily to higher variable compensation acrossall segments and higher spending in System Test and Industrial Automation, partially offset by lower spending in Wireless Test and Semiconductor Test.

Acquired Intangible Assets Amortization

Acquired intangible assets amortization expense was as follows:

2018 2017 2016 2017-2018

Change 2016-2017

Change (dollars in millions) Acquired intangible assets amortization $39.2 $30.5 $52.6 $ 8.7 $ (22.1) Percent of total revenues 1.9% 1.4% 3.0%

Acquired intangible assets amortization expense increased from 2017 to 2018 primarily due to Industrial Automation segment acquisitions of MiRand Energid in 2018.

Acquired intangible assets amortization expense decreased from 2016 to 2017 primarily in the Wireless Test segment due to the impairment ofacquired intangible assets in the second quarter of 2016 and in the Industrial Automation segment due to intangible assets that became fully amortized inJune 2017.

32

Table of Contents

Goodwill Impairment

We assess goodwill for impairment at least annually, in the fourth quarter, as of December 31, or on an interim basis between annual tests when eventsor circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. In the second quarter of 2016, theWireless Test reporting unit (which is our Wireless Test operating and reportable segment) reduced headcount by 11% as a result of a sharp decline inprojected demand attributable to an estimated smaller future wireless test market. The decrease in projected demand was due to lower forecasted buyingfrom our largest Wireless Test segment customer (which had contributed between 51% and 73% of annual Wireless Test sales since the LitePoint acquisitionin 2011 through 2015) as a result of the customer’s numerous operational efficiencies; slower smartphone growth rates; and a slowdown of new wirelesstechnology adoption. We considered the headcount reduction and sharp decline in projected demand to be a triggering event for an interim goodwillimpairment test. Following the interim goodwill impairment test, we recorded a goodwill impairment charge of $254.9 million in the second quarter of2016. The fourth quarter 2018, 2017 and 2016 goodwill impairment tests did not identify any goodwill impairments.

Acquired Intangible Assets Impairment

We review long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets maynot be fully recoverable or that the useful lives of these assets are no longer appropriate. If undiscounted cash flows for the asset are less than the carryingamount, the asset is written down to its estimated fair value based on a discounted cash flow analysis. The cash flow estimates used to determine theimpairment contain management’s best estimates using appropriate assumptions and projections at that time. As a result of the Wireless Test segmentgoodwill impairment charge in the second quarter of 2016, we performed an impairment test of the Wireless Test segment’s intangible and long-lived assetsbased on a comparison of the estimated undiscounted cash flows to the recorded value of the assets. As a result of the analysis, we recorded an $83.3 millionimpairment charge in the second quarter of 2016 in acquired intangible assets impairment on the statements of operations.

Restructuring and Other

During the year ended December 31, 2018, we recorded an expense of $17.7 million for the increase in the fair value of the MiR contingentconsideration liability, $8.7 million of severance charges related to headcount reductions primarily in Semiconductor Test, and $4.5 million for acquisitionrelated expenses and compensation, partially offset by a gain of $16.7 million from the decrease in the fair value of the Universal Robots contingentconsideration liability.

During the year ended December 31, 2017, we recorded an expense of $7.8 million for the increase in the fair value of the Universal Robotscontingent consideration liability, $3.8 million of severance charges related to headcount reductions primarily in Semiconductor Test, $1.1 million for animpairment of fixed assets in Semiconductor Test, $1.0 million for a lease impairment of a Wireless Test facility in Sunnyvale, CA, which was terminated inSeptember 2017, and $0.8 million of expenses related to an earthquake in Kumamoto, Japan, partially offset by $5.1 million of property insurance recoveryrelated to the Japan earthquake.

During the year ended December 31, 2016, we recorded an expense of $15.9 million for the increase in the fair value of the contingent considerationliability, of which $15.3 million was related to Universal Robots and $0.6 million was related to Avionics Interface Technologies, LLC (“AIT”), $6.0 millionof severance charges related to headcount reductions primarily in Wireless Test, $4.2 million for an impairment of fixed assets, and $0.9 million forexpenses related to an earthquake in Kumamoto, Japan, partially offset by $5.1 million of property insurance recovery related to the Japan earthquake.

33

Table of Contents

The remaining accrual for severance of $1.0 million is reflected in the accrued employees’ compensation and withholdings on the balance sheet and isexpected to be paid by April 2019.

Interest and Other

2018 2017 2016 2017-2018

Change 2016-2017

Change (in millions) Interest income $(26.7) $(17.8) $(9.3) $ (8.9) $ (8.5) Interest expense 31.3 21.7 3.6 9.6 18.1 Other (income) expense, net 1.4 (2.9) (2.3) 4.3 (0.6)

Interest income increased by $8.9 million from 2017 to 2018 due primarily to higher interest rates and realized gains on sales of marketable securities.Interest income increased by $8.5 million from 2016 to 2017 due primarily to higher cash and marketable securities balances and higher interest rates.

Interest expense increased by $9.6 million from 2017 to 2018 due primarily to recognizing unrealized losses on equity marketable securities, and by$18.1 million from 2016 to 2017 due primarily to interest expense related to our convertible senior notes.

Other (income) expense, net changed by $4.3 million, from $2.9 million income in 2017 to $1.4 million expense in 2018 due primarily to lowerpension actuarial gains in 2018, and higher foreign exchange losses, partially offset by lower non service pension costs. Other (income) expense, netdecreased by $0.6 million from 2016 to 2017 due primarily to pension actuarial gains.

Income (Loss) Before Income Taxes

2018 2017 2016 2017-2018

Change 2016-2017

Change (in millions) Semiconductor Test $397.6 $491.4 $ 311.9 $ (93.8) $ 179.5 System Test 48.9 10.3 28.9 38.6 (18.6) Wireless Test 29.1 17.4 (371.4) 11.7 388.8 Industrial Automation 7.7 8.8 (16.8) (1.1) 25.6 Corporate and Other (1) (15.4) (3.4) (7.7) (12.1) 4.4

$467.8 $524.4 $ (55.1) $ (56.6) $ 579.5

(1) Included in Corporate and Other are the following: contingent consideration adjustments, pension and postretirement plans actuarial (gains) and

losses, impairment of fixed assets and expenses related to the Japan earthquake, property insurance recovery and proceeds, interest (income) andexpense, net foreign exchange (gains) and losses, intercompany eliminations and acquisition related charges.

The decrease in income before income taxes in Semiconductor Test from 2017 to 2018 was driven primarily by a decrease in sales in the mobility andmicrocontroller test segments, partially offset by an increase in memory and analog test segments sales and an increase in service revenues. The increase inincome before income taxes in System Test from 2017 to 2018 was primarily due to higher system sales in Production Board Test, and higher sales of 3.5”hard disk drive and system level testers in Storage Test. The increase in income before income taxes in Wireless Test from 2017 to 2018 was primarily dueto higher demand for next generation wireless products. The decrease in income before income taxes in Industrial Automation from 2017 to 2018 was dueprimarily to increased intangible assets amortization expense from the acquisitions of MiR and Energid in 2018.

34

Table of Contents

The increase in income before income taxes in Semiconductor Test from 2016 to 2017 was driven primarily by increased sales and higher grossmargin due to favorable product mix. The increase in income before income taxes in Wireless Test from 2016 to 2017 was primarily due to goodwill andintangible assets impairment charges in 2016, lower intangible assets amortization, lower operating expenses, higher demand for connectivity test systemsand higher service revenue in 2017. The decrease in income before income taxes in System Test from 2016 to 2017 was primarily due to lower sales inStorage Test of 3.5” hard disk drive testers for cloud storage and increased spending for new product development. The increase in income before incometaxes in Industrial Automation was due primarily to higher demand for collaborative robots.

Income Taxes

Income tax expense for 2018 and 2017 totaled $16.0 and $266.7 million, respectively. Income tax benefit for 2016 totaled $11.6 million. The effectivetax rate for 2018, 2017 and 2016 was 3.4%, 50.9%, and 21.1%, respectively.

The increase in the effective tax rate from 2016 to 2017 and the decrease in the effective tax rate from 2017 to 2018 are primarily attributable to theeffect of changes in U.S. Federal tax law. On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”), makingsignificant changes to the Internal Revenue Code. Among other changes, the Tax Reform Act permanently reduces the corporate tax rate from 35% to 21%effective for tax years beginning after December 31, 2017, shifts the U.S. tax regime from a worldwide system to a modified territorial tax system andrequires companies to pay a transition tax on earnings of certain foreign subsidiaries that were previously tax deferred.

We recorded a provisional amount of $186.0 million of additional income tax expense in the fourth quarter of 2017 which represented our bestestimate of the impact of the Tax Reform Act in accordance with our understanding of the Tax Reform Act and available guidance as of that date. The$186.0 million is primarily composed of expense of $161.0 million related to the one-time transition tax on the mandatory deemed repatriation of foreignearnings, $33.6 million of expense related to the remeasurement of certain deferred tax assets and liabilities based on the rates at which they are expected toreverse in the future, and benefit of $10.3 million associated with the impact of correlative adjustments on uncertain tax positions. In accordance with therequirements of SEC Staff Accounting Bulletin (“SAB”) No. 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act”, in the fourth quarterof 2018, we completed our analysis of the effect of the Tax Reform Act based on the application of the most recently available guidance as of December 31,2018 and recorded $49.5 million of net income tax benefit. The net benefit consisted of $51.7 million of benefit resulting from a reduction in the estimate ofthe one-time transition tax on the mandatory deemed repatriation of foreign earnings and an expense of $2.2 million associated with the impact ofcorrelative adjustments on uncertain tax positions.

The change in the effective tax rate from 2017 to 2018 was also impacted by a shift in the geographic distribution of income which increased incomesubject to taxation in the U.S. relative to lower tax rate jurisdictions, the benefit of the U.S. foreign derived intangible income deduction and increases indiscrete benefit from non-taxable foreign exchange gains and losses.

The change in the effective rate from 2016 to 2017 was also impacted by the U.S. non-deductible goodwill impairment charge recorded in 2016, ashift in the geographic distribution of income which increased income subject to taxation in the U.S. relative to lower tax rate jurisdictions, decreases in thediscrete benefits from tax reserve releases, increases in discrete expense from non-taxable foreign exchange gains and losses and an increase in the discretebenefit from stock-based compensation.

We qualify for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board underwhich certain headcount and spending requirements must be met. The tax savings attributable to the Singapore tax holiday for the years ended December 31,2018, 2017 and 2016 were $11.9 million or $0.06 per diluted share, $24.8 million or $0.12 per diluted share and $17.0 million or $0.08 per diluted share,respectively. The tax holiday is scheduled to expire on December 31, 2020.

35

Table of Contents

Contractual Obligations

The following table reflects our contractual obligations as of December 31, 2018: Payments Due by Period

Total Less than

1 year 1-3

years 3-5

years More than

5 years Other (in thousands) Convertible debt $ 460,000 $ — $ — $ 460,000 $ — $ — Purchase obligations 242,052 232,533 9,519 — — — Retirement plans contributions 122,294 4,919 10,455 10,136 96,784 — Transition tax payable (1) 91,186 7,295 14,590 14,590 54,711 Operating lease obligations 76,055 19,570 31,871 15,142 9,472 — Interest on long term debt 28,750 5,750 11,500 11,500 — — Fair value of contingent consideration 70,543 34,865 35,678 — — — Other long-term liabilities reflected on the balance sheet under GAAP (2) 90,959 — 27,631 5,119 — 58,209

Total $1,181,839 $ 304,932 $ 141,244 $ 516,487 $ 160,967 $ 58,209

(1) Represents the transition tax liability associated with our accumulated foreign earnings as a result of enactment of the Tax Reform Act on

December 22, 2017.(2) Included in other long-term liabilities are liabilities for customer advances, extended warranty, uncertain tax positions, deferred tax liabilities and

other obligations. For certain long-term obligations, we are unable to provide a reasonably reliable estimate of the timing of future payments relatingto these obligations and therefore we included these amounts in the column marked “Other.”

Liquidity and Capital Resources

Our cash, cash equivalents and marketable securities balance decreased by $699 million from 2017 to 2018 to $1,205 million.

Operating activities during 2018 provided cash of $476.9 million. Changes in operating assets and liabilities used cash of $163.5 million. This wasdue to a $105.8 million increase in operating assets and a $57.7 million decrease in operating liabilities.

The increase in operating assets was due to a $58.4 million increase in prepayments and other assets due primarily to payments to our contractmanufacturers, a $29.5 million increase in inventories, and a $17.9 million increase in accounts receivable due to higher sales in the fourth quarter of 2018comparing to 2017.

The decrease in operating liabilities was due to a $80.4 million decrease in income taxes, primarily related to a decrease in our transitional tax liabilityassociated with our accumulated foreign earnings under the U.S. Tax Reform Act, a $5.5 million decrease in other accrued liabilities and $4.3 million ofretirement plans contributions, partially offset by a $13.4 million increase in customer advance payments and deferred revenue, a $12.9 million increase inaccounts payable, and a $6.3 million increase in accrued employee compensation due primarily to variable compensation.

Investing activities during 2018 provided cash of $923.0 million, due to $1,270.4 million and $846.1 million in proceeds from maturities and sales ofmarketable securities, respectively, proceeds from a government subsidy of $7.9 million for property, plant and equipment, and proceeds from life insuranceof $1.1 million related to the cash surrender value from the cancellation of a Teradyne owned life insurance policy, partially offset by $918.7 million usedfor purchase of marketable securities, $169.5 million used for acquisition of MiR and Energid, and $114.4 million used for purchases of property, plant andequipment.

36

Table of Contents

Financing activities during 2018 used cash of $903.4 million, due to $823.5 million used for the repurchase of 21.6 million shares of common stock atan average price of $38.06 per share, $67.3 million used for dividend payments, $20.0 million used for payments related to net settlement of employee stockcompensation awards, and $13.6 million used for a payment related to Universal Robots acquisition contingent consideration, partially offset by$21.0 million from the issuance of common stock under employee stock purchase and stock option plans.

Operating activities during 2017 provided cash of $626.5 million. Changes in operating assets and liabilities provided cash of $183.1 million. Thiswas due to a $33.4 million increase in operating assets and a $216.5 million increase in operating liabilities.

The increase in operating assets was due to an $80.6 million increase in accounts receivable due to higher sales, partially offset by a $45.0 milliondecrease in inventories and a $2.3 million decrease in prepayments and other assets.

The increase in operating liabilities was due to a $173.8 million increase in income taxes, primarily related to the estimated impact of U.S. TaxReform Act, a $30.9 million increase in accrued employee compensation due primarily to variable compensation, a $24.0 million increase in other accruedliabilities, and a $5.0 million increase in customer advance payments and deferred revenue, partially offset by an $11.3 million decrease in accounts payableand $5.9 million of retirement plans contributions.

Investing activities during 2017 used cash of $262.8 million, due to $1,391.9 million used for purchases of marketable securities and $105.4 millionused for purchases of property, plant and equipment, partially offset by proceeds from maturities and sales of marketable securities of $701.7 million and$527.7 million, respectively, and proceeds from property insurance of $5.1 million related to the Japan earthquake.

Financing activities during 2017 used cash of $245.2 million, due to $200.3 million used for repurchase of 5.8 million shares of common stock at anaverage price of $34.30 per share, $55.4 million used for dividend payments, $12.9 million used for payments related to net settlement of employee stockcompensation awards, and $1.1 million used for a payment related to AIT acquisition contingent consideration, partially offset by $24.5 million from theissuance of common stock under employee stock purchase and stock option plans.

Operating activities during 2016, provided cash of $455.2. Changes in operating assets and liabilities provided cash of $49.0 million. This was due toa $33.4 million decrease in operating assets and a $15.6 million increase in operating liabilities.

The decrease in operating assets was due to an $18.3 million decrease in accounts receivable due to increased collections and a $34.3 million decreasein inventories, partially offset by a $19.2 million increase in prepayments and other assets.

The increase in operating liabilities was due to an $18.4 million increase in income taxes, a $3.9 million increase in accounts payable, and a$6.7 million increase in other accrued liabilities, partially offset by a $3.8 million decrease in accrued employee compensation due primarily to variablecompensation, $6.0 million of retirement plans contributions and a $3.6 million decrease in customer advance payments and deferred revenue.

Investing activities during 2016 used cash of $640.5 million, due to $1,656.3 million used for purchases of marketable securities and $85.3 millionused for purchases of property, plant and equipment, partially offset by proceeds from maturities and sales of marketable securities of $243.2 million and$852.8 million, respectively, and proceeds from property insurance of $5.1 million related to the Japan earthquake.

Financing activities during 2016 provided cash of $228.4 million, due to $450.8 million of proceeds from the issuance of senior convertible notes, netof issuance costs, $67.9 million of proceeds from the issuance of

37

Table of Contents

warrants, $20.5 million from the issuance of common stock under employee stock purchase and stock option plans, and $6.2 million from the tax benefitrelated to employee stock compensation awards, partially offset by $146.3 million used for the repurchase of 6.8 million shares of common stock at anaverage price of $21.39 per share, $100.8 million used for the purchase of convertible note hedges, $48.6 million used for dividend payments, $11.7 millionused for a payment related to the Universal Robots acquisition contingent consideration and $9.4 million used for payments related to net settlement ofemployee stock compensation awards.

In January 2018, May 2018, August 2018 and November 2018, our Board of Directors declared a quarterly cash dividend of $0.09 per share. Totaldividend payments in 2018 were $67.3 million.

In January 2017, May 2017, August 2017 and November 2017, our Board of Directors declared a quarterly cash dividend of $0.07 per share. Totaldividend payments in 2017 were $55.4 million.

In January 2016, May 2016, August 2016 and November 2016, our Board of Directors declared a quarterly cash dividend of $0.06 per share. Totaldividend payments in 2016 were $48.6 million.

In January 2019, our Board of Directors declared a quarterly cash dividend of $0.09 per share to be paid on March 22, 2019 to shareholders of recordas of February 22, 2019. Payment of future cash dividends are subject to the discretion of our Board of Directors and will depend, among other things, uponour earnings, capital requirements and financial condition.

In January 2015, our Board of Directors cancelled the November 2010 stock repurchase program and authorized a new stock repurchase program forup to $500 million of common stock. In 2016, we repurchased 6.8 million shares of common stock at an average price of $21.39, for a total cost of$146.3 million. The cumulative repurchases as of December 31, 2016 totaled 22.5 million shares of common stock for $446 million at an average price pershare of $19.87.

In December 2016, our Board of Directors cancelled the January 2015 stock repurchase program and approved a new $500 million share repurchaseauthorization which commenced on January 1, 2017. The cumulative repurchases as of December 31, 2017 totaled 5.8 million shares of common stock for$200.3 million at an average price per share of $34.30.

In January 2018, our Board of Directors cancelled the December 2016 stock repurchase program and authorized a new stock repurchase program forup to $1.5 billion of common stock. The cumulative repurchases as of December 31, 2018 totaled 21.6 million shares of common stock for $823.5 million atan average price per share of $38.06. We intend to repurchase $500 million in 2019.

We believe our cash, cash equivalents and marketable securities balance will be sufficient to pay our quarterly dividend, execute our authorized sharerepurchase program and meet our working capital and expenditure needs for at least the next twelve months. We also have a $350 million revolving creditfacility. As of March 1, 2019 we have not borrowed any funds under this credit facility. 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 postretirementbenefit 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. Thepension asset or liability represents the difference between the fair value of the pension plan’s 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 benefitobligation as of December 31.

38

Table of Contents

For the year ended December 31, 2018, our pension expense, which includes the U.S. Qualified Pension Plan (“U.S. Plan”), certain qualified plans fornon-U.S. subsidiaries, and a U.S. Supplemental Executive Defined Benefit Plan, was approximately $0.3 million. Pension expense or income is calculatedbased upon a number of actuarial assumptions. Discount rate and expected return on assets are two assumptions which are important elements of pensionplan expense (income) and asset/liability measurement. We evaluate our discount rate and expected rate of return on assets assumptions annually on a planand country specific basis. We evaluate other assumptions related to demographic factors, such as retirement age, mortality and turnover periodically, andupdate them to reflect our experience and expectations for the future.

In developing the expected return on U.S. Plan assets assumption, we evaluated input from our investment manager and pension consultants,including their forecast of asset class return expectations. We believe that 4.25% was an appropriate rate of return on assets to use for 2018. TheDecember 31, 2018 asset allocation for our U.S. Plan was 94% invested in fixed income securities, 5% invested in equity securities, and 1% invested inother securities. Our investment manager regularly reviews the actual asset allocation and periodically rebalances the portfolio to ensure alignment with ourtarget allocations.

We recognize net actuarial gains and losses and the change in the fair value of plans assets in our operating results in the year in which they occur orupon any interim remeasurement of the plans. We calculate the expected return on plan assets using the fair value of the plan assets. Actuarial gains andlosses are generally measured annually as of December 31 and, accordingly, recorded during the fourth quarter of each year or upon any interimremeasurement 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 theU.S. Plan’s expected cash flows and was 4.15% at December 31, 2018, up from 3.40% at December 31, 2017. We estimate that in 2019 we will recognizeapproximately $0.4 million of pension expense for the U.S. Plan. The U.S. Plan pension expense estimate for 2019 is based on a 4.15% discount rate and a4.25% return on assets. Future pension expense or income will depend on future investment performance, changes in future discount rates and various otherfactors related to the employee population participating in our pension plans.

As of December 31, 2018, our pension plans had unrecognized pension prior service cost of $0.1 million.

We performed a sensitivity analysis, which expresses the potential U.S. Plan (income) expense for the year ending December 31, 2019, which wouldresult from changes to either the discount rate or the expected return on plan assets. The below estimates exclude the impact of any potential actuarial gainsor losses. It is difficult to reliably forecast or predict whether there will be any actuarial gains or losses in 2019 as they are primarily driven by events andcircumstances beyond our control, such as changes in interest rates and the performance of the financial markets. Discount Rate Return on Plan Assets 3.65% 4.15% 4.65% (in millions) 3.75% $ 0.9 $ 1.1 $ 1.2 4.25% 0.2 0.4 0.5 4.75% (0.5) (0.3) (0.2)

The assets of the U.S. Plan consist substantially of fixed income securities. U.S. Plan assets have decreased from $324.5 million at December 31,2017 to $144.3 million at December 31, 2018 while the U.S. Plan’s liability decreased from $307.0 million at December 31, 2017 to $127.4 million atDecember 31, 2018. The decrease in assets and liabilities for the U.S. Plan is due primarily to the purchase of a group annuity insurance contract in 2018.Under the group annuity, the accrued pension obligations for approximately 1,700 retiree participants were transferred to an insurance company. Thereduction in the pension benefit obligation and pension assets was $151.3 million. We recorded a settlement loss of $0.3 million related to the retiree groupannuity transaction.

39

Table of Contents

Our funding policy is to make contributions to our pension plans in accordance with local laws and to the extent that such contributions are taxdeductible. During 2018, we made contributions of $2.6 million to the U.S. supplemental executive defined benefit pension plan, and $0.8 million to certainqualified plans for non-U.S. subsidiaries. In 2019, we expect to contribute approximately $2.7 million to the U.S. supplemental executive defined benefitpension plan. Contributions to be made in 2019 to certain qualified plans for non-U.S. subsidiaries are based on local statutory requirements and areestimated at approximately $0.9 million.

Equity Compensation Plans

In addition to our 1996 Employee Stock Purchase Plan discussed in Note O: “Stock-Based Compensation” in Notes to Consolidated FinancialStatements, we have a 2006 Equity and Cash Compensation Incentive Plan (the “2006 Equity Plan”) under which equity securities are authorized forissuance. The 2006 Equity Plan was initially approved by stockholders on May 25, 2006.

At our annual meeting of stockholders held May 21, 2013, our stockholders approved an amendment to the 2006 Equity Plan to increase the numberof shares issuable thereunder by 10.0 million, for an aggregate of 32.0 million shares issuable thereunder, and our stockholders also approved an amendmentto our 1996 Employee Stock Purchase Plan to increase the number of shares issuable thereunder by 5.0 million, for an aggregate of 30.4 million sharesissuable thereunder. At our annual meeting of stockholders held May 12, 2015, our stockholders approved an amendment to the 2006 Equity Plan to extendits term until May 12, 2025.

The following table presents information about these plans as of December 31, 2018 (share numbers in thousands):

Plan category

Number of securitiesto be issued upon

exercise ofoutstanding options,warrants and rights

Weighted-averageexercise price of

outstanding options,warrants and rights

Number of securities remainingavailable for future issuanceunder equity compensationplans (excluding securitiesreflected in column one)

Equity plans approved by shareholders 2,785(1) $ 27.82 10,377(2) Equity plans not approved by

shareholders (3) 175 2.49 —

Total 2,960 19.06 10,377

(1) Includes 2,454,259 shares of restricted stock units that are not included in the calculation of the weighted average exercise price.(2) Consists of 7,873,477 securities available for issuance under the 2006 Equity Plan and 2,504,492 of securities available for issuance under the

Employee Stock Purchase Plan.(3) In connection with the 2011 acquisition of LitePoint Corporation (the “LitePoint Acquisition”), we assumed the options granted under the LitePoint

Corporation 2002 Stock Plan (the “LitePoint Plan”). Upon the consummation of the LitePoint Acquisition, these options were converted automaticallyinto options to purchase an aggregate of 2,828,344 shares of our common stock. No additional awards were granted under the LitePoint Plan. As ofDecember 31, 2018, there were outstanding options exercisable for an aggregate of 175,168 shares of our common stock pursuant to the LitePointPlan, with a weighted average exercise price of $2.49 per share.

The purpose of the 2006 Equity Plan is to motivate employees, officers and directors by providing equity ownership and compensation opportunitiesin Teradyne. The aggregate number of shares available under the 2006 Equity Plan as of December 31, 2018 was 7,873,477 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 vestingschedules and/or performance-based vesting

40

Table of Contents

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 numberof 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, 2018, total unrecognized compensation expense related to non-vested restricted stock units and options was $44 million, and isexpected to be recognized over a weighted average period of 2.4 years.

Performance Graph

The following graph compares the change in our cumulative total shareholder return in our common stock with (i) the NYSE Composite Index and(ii) the Morningstar Semiconductor Equipment & Materials Industry Group (compiled by Morningstar, Inc.). The comparison assumes $100.00 wasinvested on December 31, 2013 in our common stock and in each of the foregoing indices and assumes reinvestment of dividends, if any. Historic stockprice performance is not necessarily indicative of future price performance.

Recently Issued Accounting Pronouncements

On January 26, 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Accounting for GoodwillImpairment.” The new guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwillimpairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Allother goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment todetermine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those withzero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts.The revised guidance will be applied prospectively, and is effective in 2020. Early adoption is permitted for any impairment tests performed after January 1,2017. We are currently evaluating the impact of this ASU on our financial position, results of operations and statements of cash flows.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The guidance in this ASU supersedes the lease recognition requirements inASC Topic 840, “Leases.” The new standard establishes a right- of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability onthe balance sheet for all

41

Table of Contents

leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expenserecognition in the statements of operations. The new standard is effective for annual periods beginning after December 15, 2018 with early adoptionpermitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginningof the earliest comparative period presented in the financial statements. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): TargetedImprovements,” which amends ASU 2016-02. The new ASU offers an additional transition method by which entities may elect not to recast thecomparative periods presented in financial statements in the period of adoption and allows lessors to elect a practical expedient to not separate lease andnon-lease components when certain conditions are met. This ASU has the same transition requirements and effective date as ASU 2016-02. We elected notto recast the comparative periods presented in financial statements in the period of adoption. We adopted this guidance in January 2019; as a result werecorded between $50 and $60 million of operating lease right-of-use assets and operating lease liabilities. Adoption had an immaterial impact on our resultsof operations. Item 7A: Quantitative and Qualitative Disclosures about Market Risks

Concentration of Credit Risk

Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash equivalents, marketable securities,forward currency contracts and accounts receivable. Our cash equivalents consist primarily of money market funds invested in U.S. Treasuries andgovernment agencies. Our fixed income available-for-sale marketable securities have a minimum rating of AA by one or more of the major credit ratingagencies. We place forward currency contracts with high credit-quality financial institutions in order to minimize credit risk exposure. Concentrations ofcredit risk with respect to accounts receivable are limited due to the large number of geographically dispersed customers. We perform ongoing creditevaluations of our customers’ financial condition and from time to time may require customers to provide a letter of credit from a bank to secure accountsreceivable. There were no customers who accounted for more than 10% of our accounts receivable balance as of December 31, 2018 and December 31,2017.

In addition to market risks, we have an equity price risk related to the fair value of our convertible senior unsecured notes issued in December 2016.In December 2016, Teradyne issued $460 million aggregate principal amount of 1.25% convertible senior unsecured notes (the “Notes”) due December 15,2023. As of December 31, 2018, the Notes had a fair value of $547.1 million. The table below provides a sensitivity analysis of hypothetical 10% changesof Teradyne’s stock price as of the end of 2018 and the estimated impact on the fair value of the Notes. The selected scenarios are not predictions of futureevents, but rather are intended to illustrate the effect such event may have on the fair value of the Notes. The fair value of the Notes is subject to equity pricerisk due to the convertible feature. The fair value of the Notes will generally increase as Teradyne’s common stock price increases and will generallydecrease as the common stock price declines in value. The change in stock price affects the fair value of the convertible senior notes, but does not impactTeradyne’s financial position, cash flows or results of operations due to the fixed nature of the debt obligation. Additionally, we carry the Notes at face valueless unamortized discount on our balance sheet, and we present the fair value for required disclosure purposes only. In connection with the offering of theNotes we also sold warrants to the option counterparties. These transactions have been accounted for as an adjustment to our shareholders’ equity. Theconvertible note hedge transactions are expected to reduce the potential equity dilution upon conversion of the Notes. The warrants along with any sharesissuable upon conversion of the Notes will have a dilutive effect on our earnings per share to the extent that the average market price of our common stockfor a given reporting period exceeds the applicable strike price or conversion price of the warrants or Notes, respectively.

42

Table of Contents

Hypothetical Change in Teradyne Stock Price Fair Value

Estimatedchange in fair

value

Hypothetical percentageincrease (decrease) in

fair value 10% Increase $581,716 $ 34,603 6.3% No Change 547,113 — — 10% Decrease 514,703 (32,410) (5.9)

See Note H: “Debt” for further information.

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 and Chinese Yuan. These foreign currency forward contracts have maturities ofapproximately one month. These contracts are used to minimize the effect of exchange rate fluctuations associated with the remeasurement of monetaryassets and liabilities. We do not engage in currency speculation.

We performed a sensitivity analysis assuming a hypothetical 10% fluctuation in foreign exchange rates to the hedging contracts and the underlyingexposures described above. As of December 31, 2018, 2017, and 2016, the analysis indicated that these hypothetical market movements would not have amaterial 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 in the Netherlands, United States andSingapore 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 shortand long-term marketable securities was estimated as the potential change in the fair value resulting from a hypothetical change in interest rates forsecurities contained in the investment portfolio. The potential change in the fair value from changes in interest rates is immaterial as of December 31, 2018and 2017.

43

Table of Contents

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, 2018 and2017, and the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for each of the three years inthe period ended December 31, 2018, including the related notes and schedule of valuation and qualified accounts for each of the three years in the periodended December 31, 2018 appearing under Item 15(c) (collectively referred to as the “consolidated financial statements”). We also have audited theCompany’s internal control over financial reporting as of December 31, 2018, 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 asof December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 inconformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all materialrespects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control—IntegratedFramework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note B to the consolidated financial statements, the Company changed the manner in which it accounts for revenue from contractswith customers in 2018.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financialreporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on InternalControl over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statementsand on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public CompanyAccounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federalsecurities 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 obtainreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whethereffective 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 consolidatedfinancial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a testbasis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principlesused and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit ofinternal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a materialweakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also includedperforming such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

44

Table of Contents

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 financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal 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 asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures ofthe company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Boston, MassachusettsMarch 1, 2019

We have served as the Company’s auditor since 1968.

45

Table of Contents

TERADYNE, INC.CONSOLIDATED BALANCE SHEETS

December 31, 2018 2017

(in thousands, except per

share information) ASSETS

Current assets: Cash and cash equivalents $ 926,752 $ 429,843 Marketable securities 190,096 1,347,979 Accounts receivable, less allowance for doubtful accounts of $1,673 and $2,219 in 2018 and 2017, respectively 291,267 272,783 Inventories, net 153,541 107,525 Prepayments and other current assets 170,826 112,151

Total current assets 1,732,482 2,270,281 Property, plant and equipment, net 279,821 268,447 Marketable securities 87,731 125,926 Deferred tax assets 70,848 84,026 Retirement plans assets 16,883 17,491 Other assets 11,509 12,275 Acquired intangible assets, net 125,482 79,088 Goodwill 381,850 252,011

Total assets $2,706,606 $3,109,545

LIABILITIES Current liabilities:

Accounts payable $ 100,688 $ 86,393 Accrued employees’ compensation and withholdings 148,566 141,694 Deferred revenue and customer advances 77,711 83,614 Other accrued liabilities 78,272 59,083 Contingent consideration 34,865 24,497 Income taxes payable 36,185 59,055

Total current liabilities 476,287 454,336 Retirement plans liabilities 117,456 119,776 Long-term deferred revenue and customer advances 32,750 30,127 Long-term contingent consideration 35,678 20,605 Deferred tax liabilities 20,662 6,720 Long-term other accrued liabilities 37,547 10,273 Long-term income taxes payable 83,891 148,075 Long-term debt 379,981 365,987

Total liabilities 1,184,252 1,155,899

Commitments and contingencies (Note K) SHAREHOLDERS’ EQUITY

Common stock, $0.125 par value, 1,000,000 shares authorized, 175,522 and 195,548 shares issued and outstanding atDecember 31, 2018 and 2017, respectively 21,940 24,444

Additional paid-in capital 1,671,645 1,638,413 Accumulated other comprehensive (loss) income (13,040) 18,776 (Accumulated deficit) Retained earnings (158,191) 272,013

Total shareholders’ equity 1,522,354 1,953,646

Total liabilities and shareholders’ equity $2,706,606 $3,109,545

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

46

Table of Contents

TERADYNE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 31, 2018 2017 2016 (in thousands, except per share amounts) Revenues:

Products $1,729,621 $1,784,695 $1,453,248 Services 371,181 351,911 300,002

Total revenues 2,100,802 2,136,606 1,753,250 Cost of revenues:

Cost of products 727,138 760,967 660,056 Cost of services 153,270 154,186 134,586

Total cost of revenues (exclusive of acquired intangible assets amortization shownseparately below) 880,408 915,153 794,642

Gross profit 1,220,394 1,221,453 958,608 Operating expenses:

Selling and administrative 390,669 348,913 316,544 Engineering and development 301,505 307,305 292,159 Acquired intangible assets amortization 39,191 30,530 52,648 Restructuring and other 15,232 9,362 21,942 Goodwill impairment — — 254,946 Acquired intangible assets impairment — — 83,339

Total operating expenses 746,597 696,110 1,021,578

Income (loss) from operations 473,797 525,343 (62,970) Non-operating (income) expenses:

Interest income (26,704) (17,805) (9,296) Interest expense 31,269 21,663 3,637 Other (income) expense, net 1,431 (2,927) (2,251)

Income (loss) before income taxes 467,801 524,412 (55,060) Income tax provision (benefit) 16,022 266,720 (11,639)

Net income (loss) $ 451,779 $ 257,692 $ (43,421)

Net income (loss) per common share: Basic $ 2.41 $ 1.30 $ (0.21)

Diluted $ 2.35 $ 1.28 $ (0.21)

Weighted average common shares—basic 187,672 198,069 202,578

Weighted average common shares—diluted 192,605 201,641 202,578

Cash dividend declared per common share $ 0.36 $ 0.28 $ 0.24

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

47

Table of Contents

TERADYNE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Years Ended December 31, 2018 2017 2016 (in thousands) Net income (loss) $451,779 $257,692 $(43,421) Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustment, net of tax of $0, $0, $0 (28,442) 37,840 (13,162) Available-for-sale marketable securities:

Unrealized (losses) gains on marketable securities arising during period, net of tax of $(722), $1,903,$923, respectively (2,110) 1,863 2,037

Less: Reclassification adjustment for losses (gains) included in net income, net of tax of $(21),$(297), $(255), respectively 1,337 (441) (683)

(773) 1,422 1,354 Defined benefit pension and post-retirement plans:

Amortization of prior service benefit included in net periodic pension and post-retirement benefit, netof tax $(71), $(154), $(190), respectively (245) (272) (321)

Prior service benefit arising during period, net of tax of $0, $0, $34, respectively — — 59

(245) (272) (262)

Other comprehensive (loss) income (29,460) 38,990 (12,070)

Comprehensive income (loss) $422,319 $296,682 $(55,491)

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

48

Table of Contents

TERADYNE, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Years Ended December 31, 2018, 2017 and 2016

CommonStockSharesIssued

CommonStock Par

Value

AdditionalPaid-inCapital

AccumulatedOther

Comprehensive(Loss) Income

RetainedEarnings

(AccumulatedDeficit)

TotalShareholders’

Equity (in thousands) Balance, December 31, 2015 203,641 $ 25,455 $1,480,647 $ (8,144) $ 467,828 $ 1,965,786 Issuance of stock to employees under benefit plans, net of shares withheld for payroll tax of

$9,398 2,377 297 10,368 10,665 Equity component of convertible debt 100,836 100,836 Equity component of convertible notes issuance cost (2,017) (2,017) Purchase of convertible notes hedges (100,834) (100,834) Proceeds from issuance of warrants 67,852 67,852 Stock-based compensation expense 30,745 30,745 Repurchase of common stock (6,841) (855) (145,476) (146,331) Tax benefit related to stock options and restricted stock units 6,087 6,087 Cash dividends (48,639) (48,639) Net loss (43,421) (43,421) Foreign currency translation adjustment (13,162) (13,162) Unrealized gains on marketable securities:

Unrealized gains on marketable securities, net of tax of $923 2,037 2,037 Less: reclassification adjustment for gains included in net income, net of tax $(255) (683) (683)

Amortization of prior service (credit) cost, net of tax of $(190) (321) (321) Prior service income arising during period, net of tax of $34 59 59

Balance, December 31, 2016 199,177 24,897 1,593,684 (20,214) 230,292 1,828,659 Issuance of stock to employees under benefit plans, net of shares withheld for payroll tax of

$12,881 2,211 277 10,747 11,024 Stock-based compensation expense 33,982 33,982 Repurchase of common stock (5,840) (730) (199,574) (200,304) Cumulative effect adjustment for prior year tax benefits related to stock options and restricted

stock units 39,081 39,081 Cash dividends (55,478) (55,478) Net income 257,692 257,692 Foreign currency translation adjustment 37,840 37,840 Unrealized gains on marketable securities:

Unrealized gains on marketable securities, net of tax of $1,903 1,863 1,863 Less: reclassification adjustment for gains included in net income, net of tax of $(297) (441) (441)

Amortization of prior service benefit, net of tax of $(154) (272) (272)

Balance, December 31, 2017 195,548 24,444 1,638,413 18,776 272,013 1,953,646 Issuance of stock to employees under benefit plans, net of shares withheld for payroll tax of

$20,025 1,613 201 (72) 129 Stock-based compensation expense 33,304 33,304 Repurchase of common stock (21,639) (2,705) (829,651) (832,356) Cash dividends (67,367) (67,367) Net income 451,779 451,779 Foreign currency translation adjustment (28,442) (28,442) Unrealized losses on marketable securities:

Unrealized losses on marketable securities, net of tax of $(722) (2,110) (2,110) Less: reclassification adjustment for losses included in net income, net of tax $(21) 1,337 1,337

Reclassification of unrealized gains on equity securities, net of tax of $(902) (3,125) 3,125 — Amortization of prior service benefit, net of tax of $(71) (245) (245) Reclassification of tax effects resulting from the Tax Reform Act, net of tax of $769 769 (769) — Cumulative effect of changes in accounting principle related to revenue recognition 12,679 12,679

Balance, December 31, 2018 175,522 $ 21,940 $1,671,645 $ (13,040) $ (158,191) $ 1,522,354

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

49

Table of Contents

TERADYNE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2018 2017 2016 (in thousands) Cash flows from operating activities:

Net income (loss) $ 451,779 $ 257,692 $ (43,421) Adjustments to reconcile net income (loss) from operations to net cash provided by operating activities:

Depreciation 67,415 66,122 64,782 Amortization 45,809 41,953 55,227 Stock-based compensation 33,577 34,097 30,750 Deferred taxes 28,340 37,105 (62,936) Provision for excess and obsolete inventory 11,242 8,844 17,493 Contingent consideration fair value adjustment 987 7,820 15,896 Losses (gains) on investments 3,494 (878) (1,050) Retirement plans actuarial gains (3,316) (6,624) (3,203) Property insurance recovery, net — (4,309) — Goodwill impairment — — 254,946 Acquired intangible assets impairment — — 83,339 Tax benefit related to employee stock compensation awards — — (6,198) Other 1,083 1,585 602

Changes in operating assets and liabilities, net of businesses acquired: Accounts receivable (17,938) (80,584) 18,325 Inventories (29,498) 44,960 34,263 Prepayments and other assets (58,402) 2,254 (19,194) Accounts payable and other accrued expenses 13,693 43,574 6,820 Deferred revenue and customer advances 13,379 4,984 (3,634) Retirement plan contributions (4,334) (5,902) (6,044) Income taxes (80,429) 173,802 18,434

Net cash provided by operating activities 476,881 626,495 455,197

Cash flows from investing activities: Purchases of property, plant and equipment (114,379) (105,375) (85,272) Proceeds from government subsidy for property, plant and equipment 7,920 — — Purchases of marketable securities (918,744) (1,391,917) (1,656,267) Proceeds from maturities of marketable securities 1,270,439 701,681 243,232 Proceeds from sales of marketable securities 846,122 527,746 852,794 Proceeds from insurance 1,126 5,064 5,051 Acquisition of businesses, net of cash acquired (169,474) — —

Net cash provided by (used for) investing activities 923,010 (262,801) (640,462)

Cash flows from financing activities: Issuance of common stock under stock purchase and stock option plans 20,973 24,493 20,473 Repurchase of common stock (823,478) (200,304) (146,331) Dividend payments (67,322) (55,447) (48,619) Payments related to net settlement of employee stock compensation awards (20,023) (12,881) (9,398) Payments of contingent consideration (13,571) (1,050) (11,697) Proceeds from issuance of convertible notes, net of issuance costs — — 450,800 Purchase of convertible note hedges — — (100,834) Proceeds from issuance of warrants — — 67,852 Tax benefit related to employee stock compensation awards — — 6,198

Net cash (used for) provided by financing activities (903,421) (245,189) 228,444

Effects of exchange rate changes on cash and cash equivalents 439 3,454 —

Increase in cash and cash equivalents 496,909 121,959 43,179 Cash and cash equivalents at beginning of year 429,843 307,884 264,705

Cash and cash equivalents at end of year $ 926,752 $ 429,843 $ 307,884

Supplementary disclosure of cash flow information: Cash paid for:

Interest $ 6,205 $ 6,446 $ 446 Income taxes $ 72,811 $ 53,775 $ 40,424

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

50

Table of Contents

TERADYNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A. THE COMPANY

Teradyne, Inc. (“Teradyne”) is a leading global supplier of automation equipment for test and industrial applications. Teradyne designs, develops,manufactures and sells automatic test systems used to test semiconductors, wireless products, data storage and complex electronics systems in the consumerelectronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Teradyne’s industrial automation productsinclude collaborative robotic arms, autonomous mobile robots and advanced robotic control software used by global manufacturing and light industrialcustomers to improve quality, increase manufacturing and material handling efficiency and decrease manufacturing costs. Teradyne’s automatic testequipment and industrial automation products and services include:

• semiconductor test (“Semiconductor Test”) systems;

• defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, storage test (“Storage Test”) systems, and circuit-board test and

inspection (“Production Board Test”) systems (collectively these products represent “System Test”);

• industrial automation (“Industrial Automation”) products; and

• wireless test (“Wireless Test”) systems.

On June 11, 2015, Teradyne acquired Universal Robots A/S (“Universal Robots”) for approximately $284 million of cash plus up to an additional$65 million of cash if certain performance targets are met extending through 2018. Universal Robots is the leading supplier of collaborative robots whichare low-cost, easy-to-deploy and simple-to-program robots that work side by side with production workers. Universal Robots is a separate operating andreportable segment, Industrial Automation.

On February 26, 2018, Teradyne acquired Energid Technologies Corporation (“Energid”) for a total purchase price of approximately $28 million.Energid’s technology enables and simplifies the programming of complex robotic motions used in a wide variety of end markets, ranging from heavyindustry to healthcare, utilizing both traditional robots and collaborative robots.

On April 25, 2018, Teradyne acquired Mobile Industrial Robots ApS (“MiR”), a Danish limited liability company, for a total purchase price ofapproximately $198 million, which included $145 million of cash paid and $53 million of contingent consideration measured at fair value. The contingentconsideration is payable upon achievement of certain thresholds and targets for revenue and earnings before interest and taxes through 2020. AtDecember 31, 2018, the maximum amount of contingent consideration that could be paid is $115 million. MiR is the leading maker of collaborativeautonomous mobile robots for industrial applications.

Universal Robots, MiR and Energid are included in Teradyne’s Industrial Automation segment.

B. ACCOUNTING POLICIES

The consolidated financial statements include the accounts of Teradyne and its wholly-owned subsidiaries. All significant intercompany balances andtransactions 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 thoserelated to inventories, investments, goodwill, intangible and other long-lived assets, accounts receivable, income taxes, deferred tax

51

Table of Contents

assets and liabilities, pensions, warranties, and loss contingencies. Management bases its estimates on historical experience and on appropriate andcustomary assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about thecarrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates.

Revenue Recognition

Revenue from Contracts with Customers

Teradyne adopted Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” on January 1, 2018 using themodified retrospective method for all contracts not completed as of the date of adoption. The reported results for 2018 reflect the application of ASC 606while the reported results for 2017 were prepared under the guidance of ASC 605, “Revenue Recognition,” which is also referred to herein as “LegacyGAAP” or the “previous guidance.” Teradyne recorded a net increase to retained earnings of $12.7 million as of January 1, 2018 due to the cumulativeimpact of adopting ASC 606. The adoption of ASC 606 represents a change in accounting principle that will more closely align the timing of revenuerecognition with the delivery of Teradyne’s hardware and services and will provide financial statement readers with enhanced disclosures. In accordancewith ASC 606, revenue is recognized when or as a customer obtains control of promised goods or services. The amount of revenue recognized reflects theconsideration to which Teradyne expects to be entitled to receive in exchange for fulfillment of the performance obligation. Teradyne’s primary source ofrevenue will continue to be from the sale of systems, instruments, robots, and the delivery of services.

In accordance with ASC 606, Teradyne recognizes revenues, when or as control is transferred to a customer. Teradyne’s determination of revenue isdependent upon a five step process outlined below.

Step 1: Identify the contract with the customer

Teradyne accounts for a contract with a customer when there is written approval, the contract is committed, the rights of the parties, includingpayment terms, are identified, the contract has commercial substance and consideration is probable of collection.

Step 2: Identify the performance obligations in the contract

Teradyne periodically enters into contracts with customers in which a customer may purchase a combination of goods and services, such as productswith extended warranty obligations. Teradyne determines performance obligations by assessing whether the products or services are distinct from the otherelements 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 beseparate within the context of the contract.

Step 3: Determine the transaction price

Teradyne considers the amount stated on the face of the purchase order to be the transaction price. Teradyne does not have material variableconsideration which could impact the stated purchase price agreed to by Teradyne and the customer.

Step 4: Allocate the transaction price to the performance obligations in the contract

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 willestimate the standalone selling price through market assessments or cost plus a reasonable margin analysis. Any discounts from standalone selling price arespread proportionally to each performance obligation.

52

Table of Contents

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

In order to determine the appropriate timing for revenue recognition, Teradyne first determines if the transaction meets any of three criteria for overtime recognition. If the transaction meets the criteria for over time recognition, Teradyne recognizes revenue as the good or service is delivered. Teradyneuses 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 areused as they best align consumption with benefit to the customer. For transactions that do not meet the criteria for over time recognition, Teradyne willrecognize revenue at a point in time based on an assessment of the five criteria for transfer of control. Teradyne has concluded that revenue should berecognized when shipped or delivered based on contractual terms. Typically, acceptance of Teradyne’s products and services is a formality as Teradynedelivers similar systems, instruments and robots to standard specifications. In cases where acceptance is not deemed a formality, Teradyne will deferrevenue recognition until customer acceptance.

Revenue recognized in accordance with ASC 606 was $2,088.8 million for the twelve months ended December 31, 2018. For the twelve monthsended December 31, 2018, Teradyne also recognized $12.0 million in revenue on leases of Teradyne systems, which are accounted for outside of ASC 606.

Disaggregation of Revenue

The following table provides information about disaggregated revenue by primary geographical market, major product line and timing of revenuerecognition. For the Year Ended December 31, 2018

Semiconductor Test System Test Industrial Automation Wireless

Test Corporateand Other Consolidated

System on

a Chip Memory Defense/

Aerospace Storage

Test ProductionBoard Test

UniversalRobots

MobileIndustrial

Robots Energid (in thousands) Americas

Point in time $ 43,398 $ 14,579 $ 59,246 $ 767 $ 9,082 $ 68,289 $ 7,326 $ 543 $ 17,730 $ (1,205) $ 219,755 Over time 35,100 2,774 24,577 — 3,091 649 — 997 1,436 — 68,624

Europe, Middle East and Africa Point in time 50,988 9,726 3,056 — 16,733 105,776 10,839 — 3,821 — 200,939 Over time 21,584 1,125 2,124 — 6,467 1,000 — 1,591 1,147 — 35,038

Asia Pacific Point in time 916,107 235,061 2,769 58,004 17,761 57,830 5,950 10 100,985 — 1,394,477 Over time 140,887 10,203 965 7,877 3,221 551 — 101 6,127 — 169,932

Lease revenue 10,885 — — — 392 — — — 760 — 12,037

Total $1,218,949 $273,468 $ 92,737 $66,648 $ 56,747 $ 234,095 $ 24,115 $ 3,242 $132,006 $ (1,205) $ 2,100,802

Performance Obligations

Hardware

Teradyne hardware consists primarily of semiconductor test systems and instruments, defense/aerospace test instrumentation and systems, storage testsystems and instruments, circuit-board test and inspection systems and instruments, collaborative robots, autonomous mobile robots and wireless testsystems. The hardware includes a standard 12-month warranty. This warranty is not considered a distinct performance obligation because it does notobligate Teradyne to provide a separate service to the customer and it cannot be purchased separately. Teradyne’s hardware is recognized at a point in timeupon transfer of control to the customer.

53

Table of Contents

Extended Warranty

Customers have the option to purchase an extended warranty, which extends the warranty period for systems and robots beyond the one-year standardwarranty. The extended warranty is purchased in the same transaction as the system or robot purchase and is classified as a separate performance obligation,which meets the criteria for over time recognition. The relative standalone selling price of the extended warranty is recognized ratably over the course of theextended warranty based on months completed.

Training and Applications Support

Teradyne sells training and applications support to customers either in standalone transactions or included with system purchases. The training andsupport allow the customer to use Teradyne’s systems efficiently and effectively. Training and applications support included in system orders are valuedbased on their standalone selling price and all training and applications support is recognized over time as the customer receives and consumes the benefitassociated with each. Both are recognized using an input method of hours consumed as this best depicts the transfer of services to the customer.

Service Agreements

Service agreements are recognized ratably over the period of agreement based on months completed.

Post-Contract Customer Support (“PCS”)

Teradyne provides support services for certain systems and robots outside of warranty. These services include telephone support, bug fixes, and when-and-if available upgrades. Standalone selling price for PCS is not directly observable as Teradyne does not sell these services separately. Teradyne hasestimated the standalone selling price for these services based on adjusted market assessments. Revenue for PCS is recognized ratably over the performanceperiod.

Teradyne does not allow customer returns or provide refunds to customers for any products or services.

Contract Balances

The following table provides information about contract liabilities. Teradyne does not have material contract assets on the balance sheet.

December 31,

2018 January 1, 2018

(as adjusted) Increase (in thousands) Deferred revenue and customer advances $ 77,711 $ 76,638 $ 1,073 Long-term deferred revenue and customer advances 32,750 20,848 11,902

The amount of revenue recognized during the twelve months ended December 31, 2018 that was previously included within the deferred revenue andcustomer advances balance was $69.9 million and primarily relates to extended warranties, training, application support and PCS. Each of these represents adistinct performance obligation. Customers typically pay for these services net 30 to 60 days from the date that transfer of control of the associated systemor product occurs. Teradyne expects to recognize 70% of the remaining performance obligation in the next 12 months, 25% in 1-3 years, and the remainderthereafter.

Practical Expedients

Teradyne has adopted the practical expedients available within ASC 340 “Other Assets and Deferred Costs” for contract assets, specifically inrelation to incremental costs of obtaining a contract. Teradyne generally expenses sales commissions when incurred because the amortization period wouldbe less than one year. Teradyne records these costs within selling and administrative expenses.

54

Table of Contents

Teradyne has adopted the practical expedient, which states an entity need not adjust the promised amount of consideration for the effects of asignificant financing component if the entity expects, at contract inception, that the period between when the entity transfers a promised good or service tothe customer and when the customer pays for that good or service will be one year or less. Teradyne does not have material payments associated withperformance obligations outside this one-year time frame.

Impacts

The following tables summarize the impact of ASC 606 to Teradyne’s consolidated financial statements. Differences are the result of timingdifferences between the recognition of revenue under ASC 606 and ASC 605 primarily with respect to software transactions deferred due to lack of vendorspecific objective evidence of price under ASC 605 and Teradyne’s assessment of acceptance under ASC 606. Under Legacy GAAP, Teradyne did notrecognize revenue prior to acceptance if payment, title, or risk of loss was tied to acceptance. Under ASC 606, Teradyne recognizes revenue prior to receiptof acceptance if acceptance is deemed a formality.

Condensed Consolidated Balance Sheet: December 31, 2018

As

Reported

Adjustments toRecognize under

Legacy GAAP LegacyGAAP

(in thousands, except per share amount) Assets

Accounts receivable, less allowance for doubtful accounts $ 291,267 $ (37,348) $ 253,919 Inventories, net 153,541 10,759 164,300 Deferred tax assets 70,848 (3,874) 66,974

Liabilities Deferred revenue and customer advances $ 77,711 $ (4,118) $ 73,593 Income taxes payable 36,185 (4,495) 31,690 Long-term deferred revenue and customer advances 32,750 (10,303) 22,447

Shareholders’ equity Accumulated deficit $(158,191) $ (11,547) $(169,738)

Condensed Consolidated Statement of Operation: For the Year Ended December 31, 2018

As

Reported

Adjustments toRecognize under

Legacy GAAP LegacyGAAP

(in thousands, except per share amount) Total revenues $2,100,802 $ (39,184) $2,061,618 Total cost of revenues 880,408 (10,760) 869,648 Income tax provision 16,022 (4,197) 11,825 Net income 451,779 (24,227) 427,552 Net income per common share:

Basic $ 2.41 $ (0.13) $ 2.28

Diluted $ 2.35 $ (0.13) $ 2.22

55

Table of Contents

As of December 31, 2018 and 2017, deferred revenue and customer advances consisted of the following and are included in the short and long-termdeferred revenue and customer advances: 2018 2017 (in thousands) Maintenance and training $ 58,362 $ 57,256 Extended warranty 27,422 24,438 Customer advances, undelivered elements and other 24,677 32,047

Total deferred revenue and customer advances $ 110,461 $ 113,741

Product Warranty

Teradyne generally provides a one-year warranty on its products, commencing upon installation, acceptance or shipment. A provision is recordedupon revenue recognition to cost of revenues for estimated warranty expense based on historical experience. Related costs are charged to the warrantyaccrual as incurred. The balance below is included in other accrued liabilities: Amount (in thousands) Balance at December 31, 2015 $ 6,925

Accruals for warranties issued during the period 14,291 Accruals related to pre-existing warranties (1,354) Settlements made during the period (12,659)

Balance at December 31, 2016 7,203 Accruals for warranties issued during the period 14,223 Accruals related to pre-existing warranties (379) Settlements made during the period (12,847)

Balance at December 31, 2017 8,200 Acquisition 41 Accruals for warranties issued during the period 13,045 Accruals related to pre-existing warranties 921 Settlements made during the period (14,298)

Balance at December 31, 2018 $ 7,909

When Teradyne receives revenue for extended warranties, beyond one year, it is deferred and recognized on a straight-line basis over the contractperiod. 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, 2015 $ 30,024

Deferral of new extended warranty revenue 19,909 Recognition of extended warranty deferred revenue (21,733)

Balance at December 31, 2016 28,200 Deferral of new extended warranty revenue 20,513 Recognition of extended warranty deferred revenue (24,275)

Balance at December 31, 2017 24,438 Deferral of new extended warranty revenue 23,753 Recognition of extended warranty deferred revenue (20,769)

Balance at December 31, 2018 $ 27,422

56

Table of Contents

Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The volatility of the industries that Teradyne serves can causecertain of its customers to experience shortages of cash flows, which can impact their ability to make required payments. Teradyne maintains allowances fordoubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Estimated allowances for doubtful accountsare reviewed periodically taking into account the customer’s recent payment history, the customer’s current financial statements and other informationregarding the customer’s credit worthiness. Account balances are written off against the allowance when it is determined the receivable will not berecovered.

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 consolidatedstatements of cash flows. Total trade accounts receivable sold under the factoring agreements were $52.2 million and $5.4 million during 2018 and 2017,respectively. Factoring fees for the sales of receivables were recorded in interest expense and were not material.

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 methodologiesto evaluate all inventories for net realizable value. Teradyne records a provision for both excess and obsolete inventory when such write-downs or write-offsare identified through the quarterly review process. The inventory valuation is based upon assumptions about future demand, product mix and possiblealternative uses.

Investments

Teradyne accounts for its investments in debt and equity securities in accordance with the provisions of ASC 320-10, “Investments—Debt and EquitySecurities.” 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 duringthe twelve months ended December 31, 2018 and 2017. As defined in ASC 820-10, “Fair Value Measurements and Disclosures,” fair value is the price thatwould be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820-10 requires thatassets 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 forvaluing fixed income securities is the use of matrix pricing. Matrix pricing is a mathematical technique used to value securities by relying on thesecurities’ relationship to other benchmark quoted prices, and is considered a Level 2 input; or

57

Table of Contents

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.

In accordance with ASC 820-10, Teradyne measures its debt and equity investments at fair value. Teradyne’s debt investments are classified as Level2, and equity investments are classified as Level 1. Acquisition-related contingent consideration is classified as Level 3. Teradyne determines the fair valueof acquisition-related contingent consideration using a Monte Carlo simulation model. Assumptions utilized in the model include forecasted revenues,revenue volatility, earnings before interest and taxes, and discount rate.

Financial Assets and Financial Liabilities

In January 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10):Recognition and Measurement of Financial Assets and Financial Liabilities.” Teradyne adopted the new accounting guidance in the first quarter of 2018using the modified retrospective approach. This guidance requires that changes in fair value of equity securities be accounted for directly in earnings.Previously, the changes in fair value were recorded in accumulated other comprehensive income on the balance sheet. Teradyne continues to record realizedgains in interest income and realized losses in interest expense. The adoption of this new accounting guidance increased the January 1, 2018 retainedearnings balance by $3.1 million and decreased the accumulated other comprehensive income balance by the same amount.

Prepayments

Prepayments consist of the following and are included in prepayments and other current assets on the balance sheet: 2018 2017 (in thousands) Contract manufacturer and supplier prepayments $ 131,642 $ 82,503 Prepaid taxes 9,646 5,039 Prepaid maintenance and other services 8,487 8,189 Other prepayments 12,744 12,386

Total prepayments $ 162,519 $ 108,117

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 theyoccur 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 anyinterim remeasurement of the plans.

Retirement Benefits

In March 2017, the FASB issued ASU 2017-07, “Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net PeriodicPension Cost and Net Periodic Postretirement Benefit Cost.” Teradyne retrospectively adopted the new accounting guidance on presentation of net periodicpension costs and net periodic postretirement benefit costs in the first quarter of 2018. This guidance requires the service cost component of net benefit coststo be reported in the same line item in the consolidated statement of operations as other employee compensation costs. The non-service components of netbenefit costs such as interest cost, expected return on assets, amortization of prior service cost, and actuarial gains or losses, are required to be reportedseparately outside of income or loss from operations. Following the adoption of this

58

Table of Contents

guidance, Teradyne continues to record the service cost component in the same line item as other employee compensation costs and the non-servicecomponents of net benefit costs such as interest cost, expected return on assets, amortization of prior service cost, and actuarial gains or losses are reportedwithin other (income) expense, net. In the twelve months ended December 31, 2017 and 2016, the retrospective adoption of this standard decreased incomefrom operations by $5.0 million and $3.0 million, respectively, due to the removal of net actuarial pension gains and increased non-operating (income)expense by the same amount with no impact to net income.

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 areamortized over their estimated useful economic life and are carried at cost less accumulated amortization. Goodwill is assessed for impairment at leastannually in the fourth quarter, as of December 31, on a reporting unit basis, or more frequently when events and circumstances occur indicating that therecorded goodwill may be impaired. In accordance with ASC 350-10, Teradyne has the option to perform a qualitative assessment to determine whether it ismore 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 toperform the two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to berecognized. If Teradyne determines that it is more likely than not that the fair value of the reporting unit is greater than its carrying amounts, the two-stepgoodwill 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 eventsor 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 areno longer appropriate. Each impairment test is based on a comparison of the estimated undiscounted cash flows to the recorded value of the asset. Ifimpairment is indicated, the asset is written down to its estimated fair value based on a discounted cash flow analysis. The cash flow estimates used todetermine the impairment, if any, contain management’s best estimates using appropriate assumptions and projections at that time.

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 majorrenewals are capitalized and included in property, plant and equipment accounts while expenditures for maintenance and repairs and minor renewals arecharged to expense. When assets are retired, the assets and related accumulated depreciation are removed from the accounts and any resulting gain or loss isreflected 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 theiruseful lives as follows: Buildings 40 yearsBuilding improvements 5 to 10 yearsLeasehold improvements Lesser of lease term or 10 yearsFurniture and fixtures 10 yearsTest systems manufactured internally 6 yearsMachinery and equipment 3 to 5 yearsSoftware 3 to 5 years

Test systems manufactured internally are used by Teradyne for customer evaluations and manufacturing and support of its customers. Teradynedepreciates the test systems manufactured internally over a six-year life to cost of revenues, engineering and development, and selling and administrativeexpenses. Teradyne often sells internally manufactured test equipment to customers. Upon the sale of an internally manufactured test system,

59

Table of Contents

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 systemssold in the years ended December 31, 2018, 2017, and 2016 was $3.8 million, $3.6 million, and $11.4 million, respectively.

Engineering and Development Costs

Teradyne’s products are highly technical in nature and require a large and continuing engineering and development effort. Software development costsincurred prior to the establishment of technological feasibility are charged to expense. Software development costs incurred subsequent to the establishmentof technological feasibility are capitalized until the product is available for release to customers. To date, the period between achieving technologicalfeasibility 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 chargesrelated 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.”

In March 2016, the FASB issued ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based PaymentAccounting.” Teradyne adopted this ASU in the first quarter of 2017. This ASU changes how Teradyne accounts for certain aspects of share-based paymentawards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in thestatements of cash flows.

Adoption of this ASU required recognition of a cumulative effect adjustment to retained earnings for any prior year excess tax benefits or taxdeficiencies not previously recorded. The cumulative effect adjustment of $39 million was recorded in the first quarter of 2017 as an increase to retainedearnings and deferred tax assets.

This ASU also required a change in how Teradyne recognizes the excess tax benefits or tax deficiencies related to stock-based compensation. Prior toadopting ASU 2016-09, these excess tax benefits or tax deficiencies were credited or charged to additional paid-in capital in Teradyne’s consolidatedbalance sheets. In accordance with ASU 2016-09, starting in the first quarter of 2017, these excess tax benefits or tax deficiencies are recognized as adiscrete tax benefit or discrete tax expense to the current income tax provision in Teradyne’s consolidated statements of operations.

ASU 2016-09 requires companies to adopt the amendment related to accounting for excess tax benefits or tax deficiencies on a prospective basis. In2017, Teradyne recognized a discrete tax benefit of $6.3 million related to net excess tax benefit.

In addition, under ASU 2016-09, all excess tax benefits related to share-based payments are reported as cash flows from operating activities.Previously, excess tax benefits from share-based payment arrangements were reported as cash flows from financing activities. The classification amendmentwas applied prospectively. This ASU also clarifies that all cash payments made to taxing authorities on the employees’ behalf for withheld shares should bepresented as financing activities on the statement of cash flows. Previously, Teradyne reported cash payments made to taxing authorities as operatingactivities on the statement of cash flows. This change was applied retrospectively.

Upon adoption of ASU 2016-09, Teradyne made an accounting policy election to continue accounting for forfeitures by applying an estimatedforfeiture rate and to continue to recognize compensation costs only for those stock-based compensation awards expected to vest.

60

Table of Contents

Under its stock compensation plans, Teradyne has granted stock options, restricted stock units and performance-based restricted stock units, andemployees are eligible to purchase Teradyne’s common stock through its Employee Stock Purchase Plan (“ESPP”).

Income Taxes

Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and aremeasured 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 isreduced 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 requiredassessment of positive and negative evidence regarding the realization of the net deferred tax assets in accordance with ASC 740, “Accounting for IncomeTaxes.” 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 ofthe existing valuation allowance, will be realized.

Advertising Costs

Teradyne expenses all advertising costs as incurred. Advertising costs were $15.4 million, $9.1 million, and $6.4 million in 2018, 2017, and 2016,respectively.

Translation of Non-U.S. Currencies

The functional currency for all subsidiaries is the U.S. dollar, except for the Universal Robots and MiR reporting units for which the local currency isits functional currency. All foreign currency denominated monetary assets and liabilities are remeasured on a monthly basis into the functional currencyusing exchange rates in effect at the end of the period. All foreign currency denominated non-monetary assets and liabilities are remeasured into thefunctional currency using historical exchange rates. Net foreign exchange gains and losses resulting from remeasurement are included in other (income)expense, net. For Industrial Automation, assets and liabilities are translated into U.S. dollars using exchange rates in effect at the end of the period. Revenueand expense amounts are translated using an average of exchange rates in effect during the period. Translation adjustments are recorded within accumulatedother comprehensive income (loss).

Net foreign exchange gains and losses resulting from remeasurement are included in other (income) expense, net. For the years ended December 31,2018, 2017, and 2016, (gains) losses from the remeasurement of the monetary assets and liabilities denominated in foreign currencies were $(2.4) million,$2.9 million, and $(8.0) million, respectively.

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

Net Income (Loss) per Common Share

Basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstandingduring the period. Except where the result would be anti-dilutive, diluted net income (loss) per common share is calculated by dividing net income (loss) bythe sum of the weighted average number of common shares plus common stock equivalents, if applicable.

With respect to its convertible debt issued in 2016, Teradyne has determined that it has the ability and intent to settle the principal of the convertibledebt in cash; accordingly, the principal amount is excluded from the determination of diluted earnings per share. As a result, Teradyne is accounting for theconversion spread using the treasury stock method.

61

Table of Contents

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income, unrealized pension and postretirement prior service costs and benefits, unrealized gains and losseson investments in debt marketable securities and foreign currency translation adjustment. Prior to 2018, comprehensive income (loss) included unrealizedgains and losses on investments in equity marketable securities.

C. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

On January 26, 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Accounting for GoodwillImpairment.” The new guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwillimpairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Allother goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment todetermine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those withzero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts.The revised guidance will be applied prospectively, and is effective in 2020. Early adoption is permitted for any impairment tests performed after January 1,2017. Teradyne is currently evaluating the impact of this ASU on its financial position, results of operations and statements of cash flows.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The guidance in this ASU supersedes the lease recognition requirements inASC Topic 840, “Leases.” The new standard establishes a right- of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability onthe balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting thepattern of expense recognition in the statements of operations. The new standard is effective for annual periods beginning after December 15, 2018 withearly adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered intoafter, the beginning of the earliest comparative period presented in the financial statements. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic842): Targeted Improvements,” which amends ASU 2016-02. The new ASU offers an additional transition method by which entities may elect not to recastthe comparative periods presented in financial statements in the period of adoption and allows lessors to elect a practical expedient to not separate lease andnon-lease components when certain conditions are met. This ASU has the same transition requirements and effective date as ASU 2016-02. Teradyneelected not to recast the comparative periods presented in financial statements in the period of adoption. Teradyne adopted this guidance in January 2019; asa result it recorded between $50 and $60 million of operating lease right-of-use assets and operating lease liabilities. Adoption had an immaterial impact onTeradyne’s results of operations.

D. ACQUISITIONS

Business

Mobile Industrial Robots

On April 25, 2018, Teradyne acquired all the issued and outstanding shares of MiR, a Danish limited liability company located in Odense, Denmark.MiR is the leading maker of collaborative autonomous mobile robots for industrial applications. MiR is part of Teradyne’s Industrial Automation segment.

The total purchase price of $197.8 million included $145.2 million of cash paid and $52.6 million of contingent consideration measured at fair value.The contingent consideration is payable in Euros upon the achievement of certain thresholds and targets for revenue and earnings before interest and taxesfor periods from January 1, 2018 to December 31, 2018; January 1, 2018 to December 31, 2019; and January 1, 2018 to December 31, 2020. AtDecember 31, 2018, the maximum amount of contingent consideration that could be paid is $115 million. Contingent consideration for the period fromJanuary 1, 2018 to December 31, 2018 was $31.0 million and is expected to be paid in March 2019.

62

Table of Contents

The valuation of the contingent consideration is dependent on the following assumptions: forecasted revenues, revenue volatility, earnings beforeinterest and taxes, and discount rate. These assumptions were estimated based on a review of the historical and projected results.

The MiR acquisition was accounted for as a business combination and, accordingly, the results have been included in Teradyne’s consolidated resultsof operations from the date of acquisition. MiR’s products will help expand the Industrial Automation segment, which is a key component of our growthstrategy. The allocation of the total purchase price to MiR’s net tangible liabilities and identifiable intangible assets was based on their estimated fair valuesas of the acquisition date. The excess of the purchase price over the identifiable intangible assets and net tangible liabilities in the amount of $136.0 millionwas allocated to goodwill, which is not deductible for tax purposes. MiR’s results have been included in Teradyne’s Industrial Automation segment from thedate of acquisition.

The following table represents the final allocation of the purchase price: Purchase Price Allocation (in thousands) Goodwill $ 135,976 Intangible assets 80,670 Tangible assets acquired and liabilities assumed:

Current assets 6,039 Non-current assets 1,336 Accounts payable and current liabilities (7,336) Long-term deferred tax liabilities (18,007) Other long-term liabilities (900)

Total purchase price $ 197,778

Teradyne estimated the fair value of intangible assets using the income and cost approaches. 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 $ 58,900 7.0 Trademarks and tradenames 13,240 11.0 Customer relationships 8,500 2.5 Backlog 30 0.2

Total intangible assets $ 80,670 7.2

For the period from April 25, 2018 to December 31, 2018, MiR contributed $24.1 million of revenues and had a $(7.6) million loss before incometaxes.

63

Table of Contents

The following unaudited pro forma information gives effect to the acquisition of MiR as if the acquisition occurred on January 1, 2017. The unauditedpro forma results are not necessarily indicative of what actually would have occurred had the acquisition been in effect for the periods presented: For the Year Ended December 31, 2018 December 31, 2017

(in thousands, except per

share amounts) Revenues $ 2,107,600 $ 2,148,320 Net income $ 450,559 $ 243,399 Net income per common share:

Basic $ 2.40 $ 1.23

Diluted $ 2.34 $ 1.21

Pro forma results for the year ended December 31, 2018 were adjusted to exclude $2.9 million of acquisition related costs and $0.4 million of non-recurring expense related to fair value adjustment to acquisition-date inventory.

Pro forma results for the year ended December 31, 2017 were adjusted to include $2.9 million of acquisition related costs and $0.4 million of non-recurring expense related to fair value adjustment to acquisition-date inventory.

Energid Technologies Corporation

On February 26, 2018, Teradyne acquired all of the issued and outstanding shares of Energid for a total purchase price of approximately$27.6 million. Energid’s technology enables and simplifies the programming of complex robotic motions used in a wide variety of end markets, rangingfrom heavy industry to healthcare, utilizing both traditional robots and collaborative robots. The Energid acquisition was accounted for as a businesscombination and, accordingly, Energid’s results have been included in Teradyne’s Industrial Automation segment from the date of acquisition. As of theacquisition date, Teradyne’s purchase price allocation was goodwill of $14.4 million which is deductible for tax purposes, acquired intangible assets of$12.3 million with an average estimated useful life of 7.7 years, and $1.0 million of net tangible assets. The acquisition was not material to Teradyne’scondensed consolidated financial statements.

E. INVENTORIES

Inventories, net consisted of the following at December 31, 2018 and 2017: 2018 2017 (in thousands) Raw material $ 89,365 $ 62,668 Work-in-process 31,014 19,464 Finished goods 33,162 25,393

$ 153,541 $ 107,525

Inventory reserves for the years ended December 31, 2018 and 2017 were $100.8 million and $102.9 million, respectively.

64

Table of Contents

F. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consisted of the following at December 31, 2018 and 2017: 2018 2017 (in thousands) Land $ 16,561 $ 16,561 Buildings 105,935 98,369 Machinery and equipment 689,770 647,961 Furniture and fixtures, and software 90,384 88,539 Leasehold improvements 52,536 49,540 Construction in progress 6,276 13,522

961,462 914,492 Less: accumulated depreciation 681,641 646,045

$ 279,821 $ 268,447

Depreciation of property, plant and equipment for the years ended December 31, 2018, 2017, and 2016 was $67.4 million, $66.1 million, and$64.8 million, respectively. As of December 31, 2018 and 2017, the gross book value included in machinery and equipment for internally manufactured testsystems being leased by customers was $5.5 million and $18.1 million, respectively. As of December 31, 2018 and 2017, the accumulated depreciation onthese test systems was $5.2 million and $13.7 million, respectively.

G. FINANCIAL INSTRUMENTS

Cash Equivalents

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

Marketable Securities

Effective January 1, 2018, Teradyne adopted ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement ofFinancial Assets and Financial Liabilities,” using the modified retrospective approach. This guidance requires that changes in fair value of equity securitiesbe accounted for directly in earnings. Prior to 2018, the changes in fair value of equity securities were recorded in accumulated other comprehensive income(loss) on the balance sheet.

Teradyne’s available-for-sale debt securities are classified as Level 2 and equity securities are classified as Level 1. Contingent consideration isclassified as Level 3. The vast majority of Level 2 securities are fixed income securities priced by third party pricing vendors. These pricing vendors utilizethe most recent observable market information in pricing these securities or, if specific prices are not available, use other observable inputs like markettransactions involving identical or comparable securities.

During the years ended December 31, 2018 and 2017, there were no transfers in or out of Level 1, Level 2, or Level 3 financial instruments.

Realized gains recorded in 2018, 2017, and 2016 were $4.0 million, $1.1 million, and $1.6 million, respectively. Realized losses recorded in 2018,2017, and 2016 were $1.6 million, $0.3 million, and $0.5 million, respectively. Realized gains are included in interest income and realized losses areincluded in interest expense. Unrealized gains and losses on available-for-sale debt securities are included in accumulated other comprehensive income(loss) on the balance sheet.

Unrealized gains related to equity securities are included in interest income and unrealized losses are included in interest expense. Unrealized lossesrelated to equity securities recognized in 2018 were $6.0 million.

The cost of securities sold is based on the specific identification method.

65

Table of Contents

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 asof December 31, 2018 and 2017: December 31, 2018

Quoted Pricesin Active

Markets forIdentical

Instruments(Level 1)

SignificantOther

ObservableInputs

(Level 2)

SignificantUnobservable

Inputs(Level 3) Total

(in thousands) Assets

Cash $ 312,512 $ — $ — $ 312,512 Cash equivalents 253,525 360,715 — 614,240 Available for sale securities:

U.S. Treasury securities — 109,721 — 109,721 Commercial paper — 86,117 — 86,117 Corporate debt securities — 40,020 — 40,020 U.S. government agency securities — 9,611 — 9,611 Certificates of deposit and time deposits — 7,604 — 7,604 Debt mutual funds 3,187 — — 3,187 Non-U.S. government securities — 376 — 376

Equity securities: Mutual funds 21,191 — — 21,191

590,415 614,164 — 1,204,579 Derivative assets — 79 — 79

Total $ 590,415 $614,243 $ — $1,204,658

Liabilities Contingent consideration $ — $ — $ 70,543 $ 70,543 Derivative liabilities — 514 — 514

Total $ — $ 514 $ 70,543 $ 71,057

Reported as follows: Level 1 Level 2 Level 3 Total (in thousands) Assets

Cash and cash equivalents $ 566,037 $ 360,715 $ — $ 926,752 Marketable securities — 190,096 — 190,096 Long-term marketable securities 24,378 63,353 — 87,731 Prepayments — 79 — 79

Total $ 590,415 $ 614,243 $ — $1,204,658

Liabilities Other current liabilities $ — $ 514 $ — $ 514 Contingent consideration — — 34,865 34,865 Long-term contingent consideration — — 35,678 35,678

Total $ — $ 514 $ 70,543 $ 71,057

66

Table of Contents

December 31, 2017

Quoted Pricesin Active

Markets forIdentical

Instruments(Level 1)

SignificantOther

ObservableInputs

(Level 2)

SignificantUnobservable

Inputs(Level 3) Total

(in thousands) Assets

Cash $ 197,955 $ — $ — $ 197,955 Cash equivalents 206,335 25,553 — 231,888 Available for sale securities:

U.S. Treasury securities — 855,795 — 855,795 Commercial paper — 282,840 — 282,840 Certificates of deposit and time deposits — 167,342 — 167,342 Corporate debt securities — 133,186 — 133,186 Equity and debt mutual funds 23,430 — — 23,430 U.S. government agency securities — 10,726 — 10,726 Non-U.S. government securities — 586 — 586

427,720 1,476,028 — 1,903,748 Derivative assets — 389 — 389

Total $ 427,720 $1,476,417 $ — $1,904,137

Liabilities Contingent consideration $ — $ — $ 45,102 $ 45,102 Derivative liabilities — 446 — 446

Total $ — $ 446 $ 45,102 $ 45,548

Reported as follows: Level 1 Level 2 Level 3 Total (in thousands) Assets

Cash and cash equivalents $404,290 $ 25,553 $ — $ 429,843 Marketable securities — 1,347,979 — 1,347,979 Long-term marketable securities 23,430 102,496 — 125,926 Prepayments — 389 — 389

$427,720 $1,476,417 $ — $1,904,137

Liabilities Other current liabilities $ — $ 446 $ — $ 446 Contingent consideration — — 24,497 24,497 Long-term contingent consideration — — 20,605 20,605

$ — $ 446 $ 45,102 $ 45,548

67

Table of Contents

Changes in the fair value of Level 3 contingent consideration for the years ended December 31, 2018 and 2017 were as follows: Contingent Consideration (in thousands) Balance at December 31, 2016 $ 38,332

Payments (1) (1,050) Fair value adjustment (2) 7,820

Balance at December 31, 2017 45,102 Acquisition of MiR 52,547 Foreign currency impact (3,540) Payments (3) (24,553) Fair value adjustment (4) 987

Balance at December 31, 2018 $ 70,543

(1) During the year ended December 31, 2017, Teradyne paid $1.1 million of contingent consideration for the earn-out in connection with the acquisition

of Avionics Interface Technologies, LLC (“AIT”).(2) During the year ended December 31, 2017, the fair value of contingent consideration for the earn-out in connection with the acquisition of Universal

Robots was increased by $7.8 million primarily due to an increase in forecasted revenues and decrease in discount rate.(3) During the year ended December 31, 2018, Teradyne paid $24.6 million of contingent consideration for the earn-out in connection with the acquisition

of Universal Robots.(4) During the year ended December 31, 2018, the fair value of contingent consideration for the earn-out in connection with the acquisition of MiR was

increased by $17.7 million primarily due to an increase in forecasted revenues. During the year ended December 31, 2018, the fair value of contingentconsideration for the earn-out in connection with the acquisition of Universal Robots was decreased by $16.7 million primarily due to a decrease inforecasted revenues.

The following table provides quantitative information associated with the fair value measurement of Teradyne’s Level 3 financial instrument:

Liability

December 31,2018

Fair Value ValuationTechnique Unobservable Inputs

WeightedAverage

(in thousands) Contingent consideration(MiR)

$ 66,672(1)

Monte Carlo simulation

Revenue volatility

18.0%

Discount rate 1.1%

Contingent consideration(Universal Robots)

$3,871(1)

(1) Contingent consideration related to MiR and Universal Robots acquisitions of $31.0 million and $3.9 million, respectively, is expected to be paid in

March 2019.

As of December 31, 2018, the significant unobservable inputs used in the Monte Carlo simulation to fair value the MiR contingent considerationinclude forecasted revenues, revenue volatility, earnings before interest and taxes and discount rate. Increases or decreases in the inputs would result in ahigher or lower fair value measurement. As of December 31, 2018, the maximum amount of contingent consideration that could be paid in connection withthe acquisition of MiR is $115 million. The earn-out periods end on December 31, 2018, December 31, 2019, and December 31, 2020.

68

Table of Contents

The carrying amounts and fair values of Teradyne’s financial instruments at December 31, 2018 and 2017 were as follows: December 31, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value (in thousands) Assets

Cash and cash equivalents $ 926,752 $926,752 $ 429,843 $ 429,843 Marketable securities 277,827 277,827 1,473,905 1,473,905 Derivative assets 79 79 389 389

Liabilities Contingent consideration 70,543 70,543 45,102 45,102 Derivative liabilities 514 514 446 446 Convertible debt (1) 379,981 547,113 365,987 659,525

(1) The carrying value represents the bifurcated debt component only, while the fair value is based on quoted market prices for the convertible note which

includes the equity conversion features.

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

The following tables summarize the composition of available-for-sale marketable securities at December 31, 2018 and 2017: December 31, 2018 Available-for-Sale

Fair MarketValue of Investments

with Unrealized Losses Cost Unrealized

Gain Unrealized

(Loss) Fair Market

Value (in thousands) U.S. Treasury securities $110,969 $ 112 $ (1,360) $ 109,721 $ 75,040 Commercial paper 86,130 13 (26) 86,117 85,094 Corporate debt securities 41,133 432 (1,545) 40,020 24,767 U.S. government agency securities 9,646 1 (36) 9,611 7,077 Certificates of deposit and time deposits 7,604 — — 7,604 — Debt mutual funds 3,153 34 — 3,187 — Non-U.S. government securities 376 — — 376 —

$259,011 $ 592 $ (2,967) $ 256,636 $ 191,978

Reported as follows:

Cost Unrealized

Gain Unrealized

(Loss) Fair Market

Value

Fair MarketValue of Investments

with Unrealized Losses (in thousands) Marketable securities $190,100 $ 88 $ (92) $ 190,096 $ 140,262 Long-term marketable securities 68,911 504 (2,875) 66,540 51,716

$ 259,011 $ 592 $ (2,967) $ 256,636 $ 191,978

69

Table of Contents

December 31, 2017 Available-for-Sale

Fair MarketValue of Investments

with Unrealized Losses Cost Unrealized

Gain Unrealized

(Loss) Fair Market

Value (in thousands) U.S. Treasury securities $ 858,258 $ 72 $ (2,535) $ 855,795 $ 850,163 Commercial paper 283,009 18 (187) 282,840 258,933 Certificates of deposit and time deposits 167,523 6 (187) 167,342 138,340 Corporate debt securities 131,179 2,380 (373) 133,186 91,010 Equity and debt mutual funds 19,403 4,102 (75) 23,430 1,723 U.S. government agency securities 10,775 — (49) 10,726 10,727 Non-U.S. government securities 582 4 — 586 —

$1,470,729 $ 6,582 $ (3,406) $1,473,905 $ 1,350,896

Reported as follows:

Cost Unrealized

Gain Unrealized

(Loss) Fair Market

Value

Fair MarketValue of Investments

with Unrealized Losses (in thousands) Marketable securities $1,349,970 $ 38 $ (2,029) $1,347,979 $ 1,288,844 Long-term marketable securities 120,759 6,544 (1,377) 125,926 62,052

$1,470,729 $ 6,582 $ (3,406) $1,473,905 $ 1,350,896

As of December 31, 2018, the fair market value of investments with unrealized losses totaled $192.0 million. Of this value, $28.5 million hadunrealized losses of $1.6 million greater than one year and $163.5 million had unrealized losses of $1.4 million for less than one year.

As of December 31, 2017, the fair market value of investments with unrealized losses totaled $1,350.9 million. Of this value, $141.0 million hadunrealized losses of $1.2 million greater than one year and $1,209.9 million had unrealized losses of $2.2 million for less than one year.

Teradyne reviews its investments to identify and evaluate investments that have an indication of possible impairment. Based on this review, Teradynedetermined that the unrealized losses related to these investments at December 31, 2018 and 2017, were temporary.

The contractual maturities of investments in available-for-sale marketable securities held at December 31, 2018 were as follows: Cost Fair Value (in thousands) Due within one year $ 190,100 $ 190,096 Due after 1 year through 5 years 9,199 9,144 Due after 5 years through 10 years 14,081 13,405 Due after 10 years 42,478 40,804

Total $ 255,858 $ 253,449

Contractual maturities of investments is available-for-sale marketable securities held at December 31, 2018 exclude $3.2 million of debt mutual fundsas they do not have a contractual maturity date.

70

Table of Contents

Derivatives

Teradyne conducts business in a number of foreign countries, with certain transactions denominated in local currencies. The purpose of Teradyne’sforeign currency management is to minimize the effect of exchange rate fluctuations on certain foreign currency denominated monetary assets andliabilities. Teradyne does not use derivative financial instruments for trading or speculative purposes.

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

At December 31, 2018 and 2017, 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: December 31, 2018 December 31, 2017

Buy

Position Sell

Position Net

Total Buy

Position Sell

Position Net

Total (in millions) Japanese Yen $(35.0) $ — $(35.0) $(35.7) $ — $(35.7) Taiwan Dollar (11.2) — (11.2) (9.9) — (9.9) Korean Won (9.6) — (9.6) (8.9) — (8.9) British Pound Sterling (1.4) — (1.4) (1.4) — (1.4) Euro — 82.2 82.2 — 27.4 27.4 Singapore Dollar — 15.7 15.7 — 33.5 33.5 Philippine Peso — 5.2 5.2 — — — Chinese Yuan — 2.8 2.8 — — —

Total $(57.2) $105.9 $ 48.7 $(55.9) $ 60.9 $ 5.0

The fair value of the outstanding contracts was a loss of $0.4 million and $0.1 million, respectively, at December 31, 2018 and 2017.

Gains and losses on foreign currency forward contracts and foreign currency remeasurement gains and losses on monetary assets and liabilities areincluded in other (income) expense, net.

The following table summarizes the fair value of derivative instruments as of December 31, 2018 and 2017:

Balance Sheet Location December 31,

2018 December 31,

2017 (in thousands) Derivatives not designated as hedging instruments:

Foreign exchange contracts Prepayments $ 79 $ 389 Foreign exchange contracts Other current liabilities (514) (446)

Total derivatives $ (435) $ (57)

71

Table of Contents

The following table summarizes the effect of derivative instruments in the statements of operations recognized for the years ended December 31,2018, 2017, and 2016.

Location of (Gains) LossesRecognized in Statement

of Operations 2018 2017 2016 (in thousands) Derivatives not designated as hedging instruments:

Foreign exchange contracts Other (income) expense, net $7,257 $(1,133) $8,671 (1) The table does not reflect the corresponding gains and losses from the remeasurement of the monetary assets and liabilities denominated in foreign

currencies.(2) For the years ended December 31, 2018 and 2016, net gains from the remeasurement of monetary assets and liabilities denominated in foreign

currencies were $2.4 million and $8.0 million, respectively.(3) For the year ended December 31, 2017, net losses from the remeasurement of monetary assets and liabilities denominated in foreign currencies were

$2.9 million.

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

Concentration of Credit Risk

Financial instruments which potentially subject Teradyne to concentrations of credit risk consist principally of cash equivalents, marketable securities,forward currency contracts and accounts receivable. Teradyne’s cash equivalents consist primarily of money market funds invested in U.S. Treasuries andgovernment agencies. Teradyne’s fixed income available-for-sale marketable securities have a minimum rating of AA by one or more of the major creditrating agencies. Teradyne places foreign currency forward 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. Teradyneperforms ongoing credit evaluations of its customers’ financial condition and from time to time may require customers to provide a letter of credit from abank to secure accounts receivable. There were no customers who accounted for more than 10% of Teradyne’s accounts receivable balance as ofDecember 31, 2018 and December 31, 2017.

H. DEBT

Convertible Senior Notes

On December 12, 2016, Teradyne completed a private offering of $460.0 million aggregate principal amount of 1.25% convertible senior unsecurednotes (the “Notes”) due December 15, 2023 and received net proceeds, after issuance costs, of approximately $450.8 million, $33.0 million of which wasused 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’scommon stock under its existing stock repurchase program from purchasers of the Notes in privately negotiated transactions effected through one of theinitial purchasers or its affiliates conducted concurrently with the pricing of the Note offering. The Notes will mature on December 15, 2023, unless earlierrepurchased or converted. The Notes bear interest from December 12, 2016 at a rate of 1.25% per year payable semiannually in arrears on June 15 andDecember 15 of each year, beginning on June 15, 2017. The Notes will be convertible at the option of the noteholders at any time prior to the close ofbusiness on the business day immediately preceding September 15, 2023, only under the following circumstances: (1) during any calendar quarter beginningafter March 31, 2017 (and only during such calendar quarter), if the closing sale price of Teradyne’s common stock, for at least 20 trading days (whether ornot consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the“measurement period”) in which the trading price (as defined in the Indenture) per $1,000 principal amount of Notes for each trading day of themeasurement period was less

72

Table of Contents

than 98% of the product of the closing sale price of the Teradyne’s common stock and the conversion rate on each such trading day; and (3) upon theoccurrence of specified corporate events. On or after September 15, 2023 until the close of business on the second scheduled trading day immediatelypreceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances. Teradyne may satisfy its conversionobligation by paying or delivering cash, shares of its common stock or a combination of cash and shares of its common stock, at Teradyne’s election. As ofDecember 31, 2018, the conversion price was approximately $31.70 per share of Teradyne’s common stock. The conversion rate is subject to adjustmentunder certain circumstances.

Concurrent with the offering of the Notes, Teradyne entered into convertible note hedge transactions (the “Note Hedge Transactions”) with the initialpurchasers or their affiliates (the “Option Counterparties”). The Note Hedge Transactions cover, subject to customary anti-dilution adjustments, the numberof shares of the common stock that underlie the Notes, with a strike price equal to the conversion price of the Notes of $31.70. The Note Hedge Transactionscover, subject to customary anti-dilution adjustments, approximately 14.5 million shares of Teradyne’s common stock.

Separately and concurrent with the pricing of the Notes, Teradyne entered into warrant transactions with the Option Counterparties (the “WarrantTransactions”) in which it sold net-share-settled (or, at its election subject to certain conditions, cash-settled) warrants to the Option Counterparties. TheWarrant Transactions cover, subject to customary anti-dilution adjustments, approximately 14.5 million shares of common stock. As of December 31, 2018,the strike price of the warrants was approximately $39.78 per share. The strike price is subject to adjustment under certain circumstances. The WarrantTransactions could have a dilutive effect to Teradyne’s common stock to the extent that the market price per share of Teradyne’s common stock, as measuredunder the terms of the Warrant Transactions, exceeds the applicable strike price of the warrants.

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

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

Teradyne considered the guidance of ASC 815-40, “Derivatives and Hedging—Contracts in Entity’s Own Equity,” and concluded that the convertiblenote hedge is both indexed to Teradyne’s stock and should be classified in stockholders’ equity in its statements of financial position. The convertible notehedge is considered indexed to Teradyne’s stock as the terms of the Note Hedge Transactions do not contain an exercise contingency and the settlementamount equals the difference between the fair value of a fixed number of Teradyne’s shares and a fixed strike price. Because the only variable that can affectthe settlement amount is Teradyne’s stock price, which is an input to the fair value of a fixed-for-fixed option contract, the convertible note hedge isconsidered indexed to Teradyne’s stock.

73

Table of Contents

Teradyne assessed whether the convertible note hedge should be classified as equity under ASC 815-40. In the Note Hedge Transactions contract thesettlement terms permit net cash settlement or net share settlement, at the option of Teradyne. Therefore, the criteria as set forth in ASC 815-40 wereevaluated by Teradyne. In reviewing the criteria, Teradyne noted the following: (1) the convertible note hedge does not require Teradyne to issue shares;(2) there is no requirement to net cash settle the convertible note hedge for failure to make timely filings with the SEC; (3) in the case of termination, theconvertible note hedge is settled in the same consideration as the holders of the underlying stock; (4) the counterparty does not have rights that rank higherthan those of a shareholder of the stock underlying the convertible note hedge; and (5) there is no requirement to post collateral. Based on its analysis ofthose criteria, Teradyne concluded that the convertible note hedge should be recorded in equity and no further adjustment should be made in future periodsto adjust the value of the convertible note hedge.

Teradyne analyzed the Warrant Transactions under ASC 815-40, “Derivatives and Hedging—Contracts in Entity’s Own Equity,” and other relevantliterature, and determined that it met the criteria for classification as an equity transaction and is considered indexed to Teradyne’s stock. As a result,Teradyne recorded the proceeds from the warrants as an increase to additional paid-in capital. Teradyne does not recognize subsequent changes in fair valueof the warrants in its financial statements.

The provisions of ASC 470-20, “Debt with Conversion and Other Options,” are applicable to the Notes. ASC 470-20 requires Teradyne to separatelyaccount for the liability (debt) and equity (conversion feature) components of the Notes in a manner that reflects Teradyne’s nonconvertible debt borrowingrate at the date of issuance when interest cost is recognized in subsequent periods. Teradyne allocated $100.8 million of the $460.0 million principal amountof the Notes to the equity component, which represents a discount to the debt and will be amortized to interest expense using the effective interest methodthrough December 2023. Accordingly, Teradyne’s effective annual interest rate on the Notes will be approximately 5.0%. The Notes are classified as long-term debt in the balance sheet based on their December 15, 2023 maturity date. Debt issuance costs of approximately $7.2 million are being amortized tointerest expense using the effective interest method over the seven year term of the Notes. As of December 31, 2018, debt issuance costs wereapproximately $5.3 million.

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

December 31,

2018 December 31,

2017 (in thousands) Debt principal $ 460,000 $ 460,000 Unamortized discount 80,019 94,013

Net carrying amount of convertible debt $ 379,981 $ 365,987

For the year ended

December 31,

2018 December 31,

2017 (in thousands) Contractual interest expense on the coupon $ 5,750 $ 5,734 Amortization of the discount component and debt issue fees recognized as interest expense 13,995 13,318

Total interest expense on the convertible debt $ 19,745 $ 19,052

As of December 31, 2018, the unamortized discount was $80.0 million, which will be amortized over five years using the effective interest ratemethod. The carrying amount of the equity component was $100.8 million. As of December 31, 2018, the conversion price was approximately $31.70 pershare and if converted the value of the notes was $455.4 million.

74

Table of Contents

Revolving Credit Facility

On April 27, 2015, Teradyne entered into a Credit Agreement (the “Credit Agreement”) with Barclays Bank PLC, as administrative agent andcollateral agent, and the lenders party thereto. The Credit Agreement provides for a five-year, senior secured revolving credit facility of up to $350 million(the “Credit Facility”). The Credit Agreement further provides that, subject to customary conditions, Teradyne may seek to obtain from existing or newlenders incremental commitments under the Credit Facility in an aggregate principal amount not to exceed $150 million.

Proceeds from the Credit Facility may be used for general corporate purposes and working capital. Teradyne incurred $2.3 million in costs related tothe revolving credit facility. These costs are being amortized over the five-year term of the revolving credit facility and are included in interest expense inthe statements of operations. As of March 1, 2019, Teradyne has not borrowed any funds under the Credit Facility.

The interest rates 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 1.00% per annum or LIBOR plus a margin ranging from 1.00% to 2.00% per annum, based on the Consolidated Leverage Ratio of Teradyne and itsRestricted Subsidiaries. In addition, Teradyne will pay a commitment fee on the unused portion of the commitments under the Credit Facility ranging from0.125% to 0.350% 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 permittedto prepay all or any portion of the loans under the Credit Facility prior to maturity without premium or penalty, other than customary LIBOR breakage costs.

The Credit Agreement contains customary events of default, representations, warranties and affirmative and negative covenants that, among otherthings, limit Teradyne’s and its Restricted Subsidiaries’ ability to sell assets, grant liens on assets, incur other secured indebtedness and make certaininvestments and restricted payments, all subject to exceptions set forth in the Credit Agreement. The Credit Agreement also requires Teradyne to satisfy twofinancial ratios measured as of the end of each fiscal quarter: a consolidated leverage ratio and an interest coverage ratio. As of December 31, 2018,Teradyne was in compliance with all covenants.

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.

75

Table of Contents

I. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

Changes in accumulated other comprehensive (loss) income, which is presented net of tax, consist of the following:

ForeignCurrency

TranslationAdjustment

UnrealizedGains

(Losses) onMarketableSecurities

RetirementPlans Prior

ServiceCredit Total

(in thousands) Balance at December 31, 2016, net of tax of $0, $209, $(778) $ (21,921) $ (60) $ 1,767 $(20,214)

Other comprehensive income before reclassifications, net of tax of $0, $1,903, $0 37,840 1,863 — 39,703 Amounts reclassified from accumulated other comprehensive income, net of tax of

$0, $(297), $(154) — (441) (272) (713)

Net current period other comprehensive income, net of tax of $0, $1,606, $(154) 37,840 1,422 (272) 38,990

Balance at December 31, 2017, net of tax of $0, $1,815, $(932) 15,919 1,362 1,495 18,776

Other comprehensive loss before reclassifications, net of tax of $0, $(722), $0 (28,442) (2,110) — (30,552) Amounts reclassified from accumulated other comprehensive income, net of tax of

$0, $(21), $(71) — 1,337 (245) 1,092

Net current period other comprehensive loss, net of tax of $0, $(743), $(71) (28,442) (773) (245) (29,460)

Reclassification of tax effects resulting from the Tax Reform Act, net of tax of $0,$(691), $(78), respectively (a) — 691 78 769

Reclassification of unrealized gains on equity securities, net of tax of $0, $(902),$0, respectively, (b) — (3,125) — (3,125)

Balance at December 31, 2018, net of tax of $0, $(521), $(1,081) $ (12,523) $ (1,845) $ 1,328 $(13,040)

(a) In the year ended December 31, 2018, Teradyne early adopted ASU 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” As a result, the stranded tax effects resulting from the TaxReform Act enacted in December 2017 were reclassified from accumulated other comprehensive income to retained earnings.

(b) In the year ended December 31, 2018, Teradyne adopted ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition andMeasurement of Financial Assets and Financial Liabilities.” See Note B: “Accounting Policies.”

76

Table of Contents

Reclassifications out of accumulated other comprehensive income to the statements of operations for the years ended December 31, 2018, 2017, and2016 were as follows: Details about AccumulatedOther Comprehensive IncomeComponents For the year ended

Affected Line Itemin the Statements

of Operations

December 31,

2018 December 31,

2017 December 31,

2016 (in thousands) Available-for-sale marketable securities

Unrealized (losses) gains, net of tax of $21, $297, $255 $ (1,337) $ 441 $ 683

Interest income(expense)

Defined benefit pension and postretirement plans: Amortization of prior service benefit, net of tax of $71,

$154, $190 245 272 321 (a)

Total reclassifications, net of tax of $92, $451, $445 $ (1,092) $ 713 $ 1,004 Net income

(a) The amortization of prior service credit is included in the computation of net periodic pension cost and postretirement benefit; see Note N:

“Retirement Plans.”

J. 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,” onDecember 31 of each fiscal year unless interim indicators of impairment exist. Goodwill is considered to be impaired when the net book value of a reportingunit exceeds its estimated fair value.

Teradyne has the option to perform a qualitative assessment (“Step zero”) to determine whether it is more likely than not that the fair value of areporting unit is less than its carrying amount. If Teradyne determines this is the case, Teradyne is required to perform the two-step goodwill impairment testto identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized. If Teradyne determines that it is morelikely than not that the fair value of the reporting unit is greater than its carrying amounts, the two-step goodwill impairment test is not required. Whenperforming the two-step process, the first step involves a comparison of the estimated fair value of a reporting unit to its carrying amount, includinggoodwill. In performing the first step, Teradyne determines the fair value of a reporting unit using the results derived from an income approach and a marketapproach. The income approach is estimated through the discounted cash flow (“DCF”) analysis. Determining fair value requires the exercise of significantjudgment, including judgments about appropriate discount rates, perpetual growth rates, and the amount and timing of expected future cash flows. Discountrates 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, plusa risk premium. The WACC used to test goodwill is derived from a group of comparable companies. The cash flows employed in the DCF analysis arederived from internal forecasts and external market forecasts. The market approach estimates the fair value of the reporting unit by utilizing the marketcomparable method which is based on revenue and earnings multiples from comparable companies. If the estimated fair value of a reporting unit exceeds itscarrying amount, goodwill of the reporting unit is not impaired and the second step of the impairment test is not necessary. If the carrying amount of areporting unit exceeds its estimated fair value, then the second step of the goodwill impairment test must be performed. The second step of the goodwillimpairment test compares the implied fair value of the reporting unit’s goodwill with its carrying amount of goodwill to measure the amount of impairmentloss, if any. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination, wherebythe estimated fair value of the reporting unit is allocated to all of the assets and

77

Table of Contents

liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair valueof the reporting unit was the purchase price paid. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, animpairment loss is recognized in an amount equal to that excess.

In the second quarter of 2016, the Wireless Test reporting unit (which is Teradyne’s Wireless Test operating and reportable segment) reducedheadcount by 11% as a result of a sharp decline in projected demand attributable to an estimated smaller future wireless test market. The decrease inprojected demand was due to lower forecasted buying from Teradyne’s largest Wireless Test segment customer (who has contributed between 51% and 73%of annual Wireless Test sales since the LitePoint acquisition in 2011 through 2015) as a result of the customer’s numerous operational efficiencies; slowersmartphone growth rates; and a slowdown of new wireless technology adoption. Teradyne considered the headcount reduction and sharp decline in projecteddemand to be a triggering event for an interim goodwill impairment test.

Teradyne allocated the fair value of the Wireless Test reporting unit to all of its assets and liabilities (including unrecognized intangible assets). Thenet book value of raw materials inventory was estimated as an approximation of current replacement costs. The fair value of finished goods inventory wasestimated at the present value of selling price less direct selling costs and profit on the selling effort. The selling price used in the inventory fair values wasbased upon the product gross margins included in Teradyne’s forecast. The fair value of the deferred revenue liability was estimated by assessing the costsrequired to service the obligation plus a reasonable profit margin. The fair value for personal property assets, which consisted of furniture and fixtures,machinery and equipment, computer equipment, software and leasehold improvements, was estimated using the replacement cost approach, whichapproximated carrying value. The fair value of intangible assets was estimated using the income approach and, in particular, developed technology andtrademarks/trade names were valued using the relief-from-royalty method and customer relationships and customer backlog were valued using thediscounted cash flow method. Royalty rates were estimated using rates applicable to wireless testing equipment and other similar technologies. Based uponthis allocation, Teradyne determined that the Wireless Test reporting unit goodwill is valued at $8.0 million and recorded an impairment loss of$254.9 million in the second quarter of 2016.

In the fourth quarter of 2018, Teradyne performed the annual goodwill impairment test. Teradyne completed step one of the two-step impairment testfor the Universal Robots reporting unit. Teradyne completed step zero for the Wireless Test, Defense/Aerospace, MiR, and Energid reporting units. Therewas no impairment as a result of the annual test performed in the fourth quarter of 2018.

In the fourth quarter of 2017, Teradyne performed the annual goodwill impairment test. Teradyne completed step one of the two-step impairment testfor the Universal Robots reporting unit. Teradyne completed step zero for the Wireless Test and Defense/Aerospace reporting units. There was noimpairment as a result of the annual test performed in the fourth quarter of 2017.

In the fourth quarter of 2016, Teradyne performed the annual goodwill impairment test. Teradyne completed step one of the two-step impairment testfor the Universal Robots, Wireless Test and Defense/Aerospace reporting units. There was no impairment as a result of the annual test performed in thefourth quarter of 2016.

78

Table of Contents

The changes in the carrying amount of goodwill by reportable segments for the years ended December 31, 2018 and 2017 are as follows:

Industrial

Automation System

Test Wireless

Test Semiconductor

Test Total (in thousands) Balance at December 31, 2016: Goodwill $ 204,851 $ 158,699 $ 361,819 $ 260,540 $ 985,909 Accumulated impairment losses — (148,183) (353,843) (260,540) (762,566)

204,851 10,516 7,976 — 223,343 Foreign currency translation adjustment 28,668 — — — 28,668

Balance at December 31, 2017: Goodwill 233,519 158,699 361,819 260,540 1,014,577 Accumulated impairment losses — (148,183) (353,843) (260,540) (762,566)

233,519 10,516 7,976 — 252,011 MiR acquisition 135,976 — — — 135,976 Energid acquisition 14,394 — — — 14,394 Foreign currency translation adjustment (20,531) — — — (20,531) Balance at December 31, 2018: Goodwill 363,358 158,699 361,819 260,540 1,144,416 Accumulated impairment losses — (148,183) (353,843) (260,540) (762,566)

$ 363,358 $ 10,516 $ 7,976 $ — $ 381,850

Intangible Assets

Teradyne reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of theassets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. As a result of the Wireless Test segment goodwillimpairment review in the second quarter of 2016, Teradyne performed an impairment test of the Wireless Test segment’s intangible and long-lived assets.The impairment test is based on a comparison of the estimated undiscounted cash flows to the carrying value of the asset group. If undiscounted cash flowsfor the asset group are less than the carrying amount, the asset group is written down to its estimated fair value based on a discounted cash flow analysis.The cash flow estimates used to determine the impairment contain management’s best estimates using appropriate assumptions and projections at that time.The fair value of intangible assets was estimated using the income approach and, in particular, developed technology and trademarks/trade names werevalued using the relief-from-royalty method and customer relationships were valued using the discounted cash flow method. Royalty rates were estimatedusing rates applicable to wireless testing equipment and other similar technologies. As a result of the analysis, Teradyne recorded an $83.3 millionimpairment charge in the second quarter of 2016 in acquired intangible assets impairment on the statements of operations, resulting in a remainingintangible assets balance of $2.2 million at December 31, 2018 for the Wireless Test segment.

There were no events or circumstances indicating that the carrying value of intangible and long-lived assets may not be recoverable in 2018 and 2017.

79

Table of Contents

Amortizable intangible assets consist of the following and are included in intangible assets, net on the balance sheets: December 31, 2018

GrossCarrying

Amount (1)(2) Accumulated

Amortization (2)

ForeignCurrency

TranslationAdjustment

NetCarryingAmount

(in thousands) Developed technology $ 336,308 $ (252,080) $ (4,079) $ 80,149 Customer relationships 97,153 (83,448) (340) 13,365 Tradenames and trademarks 64,420 (31,653) (799) 31,968 Non-compete agreement 320 (320) — — Backlog 30 (30) — —

Total intangible assets $ 498,231 $ (367,531) $ (5,218) $125,482

December 31, 2017

GrossCarryingAmount

AccumulatedAmortization

ForeignCurrency

TranslationAdjustment

NetCarryingAmount

(in thousands) Developed technology $270,877 $ (226,190) $ 1,618 $46,305 Customer relationships 92,741 (83,585) 171 9,327 Tradenames and trademarks 50,100 (27,120) 416 23,396 Non-compete agreement 320 (260) — 60

Total intangible assets $414,038 $ (337,155) $ 2,205 $79,088

(1) Includes intangible assets acquired in 2018, $80.7 million from the MiR acquisition and $12.3 million from the Energid acquisition.(2) In 2018, $8.8 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, 2018, 2017, and 2016 was $39.2 million, $30.5 million, and$52.6 million, respectively. Estimated intangible assets amortization expense for each of the five succeeding fiscal years is as follows: Year Amortization Expense (in thousands) 2019 $ 38,496 2020 24,186 2021 13,945 2022 13,052 2023 12,785 Thereafter 23,018

K. COMMITMENTS AND CONTINGENCIES

Purchase Commitments

As of December 31, 2018, Teradyne had entered into non-cancelable purchase commitments for certain components and materials. The purchasecommitments covered by the agreements aggregate to approximately $242.1 million, of which $232.5 million is for less than one year.

80

Table of Contents

Commitments

Teradyne leases certain of its office buildings and other facilities under various operating lease arrangements that include renewal options andescalation clauses for adjusting rent payments to reflect changes in price indices. Rental expense for leases with fixed escalation clauses is recognized on astraight line basis over the lease term.

Rental expense for the years ended December 31, 2018, 2017, and 2016 was $19.3 million, $20.2 million, and $19.1 million, respectively.

The following table reflects Teradyne’s non-cancelable operating lease commitments:

Non-cancelable

LeaseCommitments

(in thousands) 2019 $ 19,570 2020 18,293 2021 13,578 2022 9,693 2023 5,449 Beyond 2024 9,472

Total $ 76,055

Legal Claims

Teradyne is subject to legal proceedings, claims and investigations that arise in the ordinary course of business such as, but not limited to, patent,employment, commercial and environmental matters. Teradyne believes that it has meritorious defenses against all pending claims and intends to vigorouslycontest 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 orresults 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 certainevents or occurrences while the officer, director, employee, or agent, is or was serving, at Teradyne’s request in such capacity. Teradyne has entered intoindemnification agreements with certain of its officers and directors. With respect to acquisitions, Teradyne provides indemnifications to or assumesindemnification obligations for the current and former directors, officers and employees of the acquired companies in accordance with the acquiredcompanies’ by-laws and charter. As a matter of practice, Teradyne has maintained directors’ and officers’ liability insurance coverage including coveragefor 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 theseagreements require Teradyne to defend and/or indemnify the other party against intellectual property infringement claims brought by a third party withrespect to Teradyne’s products. From time to time, Teradyne also indemnifies customers and business partners for damages, losses and liabilities they maysuffer or incur relating to personal injury, personal property damage, product liability, breach of confidentiality obligations and environmental claimsrelating to the use of Teradyne’s products and services or resulting from the acts or omissions of Teradyne, its employees, authorized agents orsubcontractors. On occasion, Teradyne has also provided guarantees to customers regarding the delivery and performance of its products in addition to thewarranty described below.

As a matter of ordinary business course, Teradyne warrants that its products will substantially perform in accordance with its standard publishedspecifications in effect at the time of delivery. Most warranties have a one-year duration commencing from installation. A provision is recorded uponrevenue recognition to cost of revenue for estimated warranty expense based upon historical experience. When Teradyne receives revenue for

81

Table of Contents

extended warranties beyond the standard duration, it is deferred and recognized on a straight line basis over the contract period. Related costs are expensedas incurred. As of December 31, 2018 and 2017, Teradyne had a product warranty accrual of $7.9 million and $8.2 million, respectively, included in otheraccrued liabilities, and revenue deferrals related to extended warranties of $27.4 million and $24.4 million, respectively, included in short and long-termdeferred revenue and customer advances.

In addition, in the ordinary course of business, Teradyne provides minimum purchase guarantees to certain vendors to ensure continuity of supplyagainst the market demand. Although some of these guarantees provide penalties for cancellations and/or modifications to the purchase commitments as themarket demand decreases, most of the guarantees do not. Therefore, as the market demand decreases, Teradyne re-evaluates these guarantees anddetermines what charges, if any, should be recorded.

With respect to its agreements covering product, business or entity divestitures and acquisitions, Teradyne provides certain representations, warrantiesand 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 tothe 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, 2018 and 2017, except for product warranty, Teradyne has not recordedany liabilities for these guarantees and obligations because the amount would be immaterial.

L. NET INCOME (LOSS) PER COMMON SHARE

The following table sets forth the computation of basic and diluted net income (loss) per common share: 2018 2017 2016 (in thousands, except per share amounts) Net income (loss) for basic and diluted net income per share $ 451,779 $ 257,692 $ (43,421)

Weighted average common shares-basic 187,672 198,069 202,578 Effect of dilutive potential common shares: Incremental shares from assumed conversion of convertible notes (1) 2,749 1,298 — Convertible note hedge warrant shares (2) 485 112 — Restricted stock units 1,385 1,800 — Stock options 278 335 0 Employee stock purchase rights 36 27 0

Dilutive potential common shares 4,933 3,572 —

Weighted average common shares-diluted 192,605 201,641 202,578

Net income (loss) per common share-basic $ 2.41 $ 1.30 $ (0.21)

Net income (loss) per common share-diluted $ 2.35 $ 1.28 $ (0.21)

(1) 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 of $31.70, multiplied by 14.5 million shares. The result of this calculation, representing the total intrinsicvalue of the convertible debt, was divided by the average Teradyne stock price for the period.

(2) Convertible notes hedge warrant shares were calculated using the difference between the average Teradyne stock price for the period and the warrantprice of $39.78, multiplied by 14.5 million shares. The result of this calculation, representing the total intrinsic value of the warrant, was divided bythe average Teradyne stock price for the period.

82

Table of Contents

The computation of diluted net income per common share for 2018 excludes the effect of the potential exercise of stock options to purchaseapproximately 0.1 million shares and restricted stock units to purchase approximately 0.5 million shares because the effect would have been anti-dilutive.

The computation of diluted net income per common share for 2017 excludes the effect of the potential exercise of stock options to purchaseapproximately 0.1 million shares because the effect would have been anti-dilutive.

The computation of diluted net loss per common share for 2016 excludes the effect of the potential exercise of all outstanding stock options andrestricted stock units because Teradyne had a net loss and inclusion would be anti-dilutive.

M. RESTRUCTURING AND OTHER

During the year ended December 31, 2018, Teradyne recorded an expense of $17.7 million for the increase in the fair value of the MiR contingentconsideration liability, $8.7 million of severance charges related to headcount reductions primarily in Semiconductor Test, and $4.5 million for acquisitionrelated expenses and compensation, partially offset by a gain of $16.7 million for the decrease in the fair value of the Universal Robots contingentconsideration liability.

During the year ended December 31, 2017, Teradyne recorded an expense of $7.8 million for the increase in the fair value of the Universal Robotscontingent consideration liability, $3.8 million of severance charges related to headcount reductions primarily in Semiconductor Test, $1.1 million for animpairment of fixed assets in Semiconductor Test, $1.0 million for a lease impairment of a Wireless Test facility in Sunnyvale, CA, which was terminated inSeptember 2017, and $0.8 million of expenses related to an earthquake in Kumamoto, Japan, partially offset by $5.1 million of property insurance recoveryrelated to the Japan earthquake.

During the year ended December 31, 2016, Teradyne recorded an expense of $15.9 million for the increase in the fair value of the contingentconsideration liability, of which $15.3 million was related to Universal Robots and $0.6 million was related to AIT, $6.0 million of severance charges relatedto headcount reductions primarily in Wireless Test, $4.2 million for an impairment of fixed assets, and $0.9 million for expenses related to an earthquake inKumamoto, Japan, partially offset by $5.1 million of property insurance recovery related to the Japan earthquake.

N. RETIREMENT PLANS

ASC 715, “Compensation—Retirement Benefits,” requires an employer with defined benefit plans or other postretirement benefit plans to recognizean 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 liabilityrepresents a difference between the fair value of the pension plan’s assets and the projected benefit obligation at December 31. Teradyne uses aDecember 31 measurement date for all of its plans.

Defined Benefit Pension Plans

Teradyne has defined benefit pension plans covering a portion of domestic employees and employees of certain non-U.S. subsidiaries. Benefits underthese plans are based on employees’ years of service and compensation. Teradyne’s funding policy is to make contributions to the plans in accordance withlocal laws and to the extent that such contributions are tax deductible. The assets of these plans consist primarily of fixed income and equity securities. Inaddition, Teradyne has an unfunded supplemental executive defined benefit plan in the United States to provide retirement benefits in excess of levelsallowed by the Employment Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (the “IRC”), as well as unfunded qualified foreignplans.

83

Table of Contents

During 2018, Teradyne purchased a group annuity contract for its retiree participants in the U.S. qualified pension plan. Under the group annuity, theaccrued pension obligations for approximately 1,700 retiree participants were transferred to an insurance company. The reduction in the pension benefitobligation and pension assets was $151.3 million. During 2018, Teradyne recorded a settlement loss of $0.3 million related to the retiree group annuitytransaction.

The December 31 balances of these defined benefit pension plans assets and obligations are shown below: 2018 2017 United States Foreign United States Foreign (in thousands) Assets and Obligations Change in benefit obligation: Projected benefit obligation:

Beginning of year $ 363,026 $ 39,353 $ 353,616 $ 60,738 Service cost 2,196 786 2,239 818 Interest cost 8,940 687 13,151 852 Actuarial (gain) loss (30,136) 773 12,702 262 Benefits paid (14,793) (741) (18,682) (994) Retiree annuity purchase (151,341) — — — Liability loss due to settlement 345 — — — Settlements — — — (28,560) Admin expenses paid — — — (40) Non-U.S. currency movement — (1,712) — 6,277

End of year 178,237 39,146 363,026 39,353

Change in plan assets: Fair value of plan assets:

Beginning of year 324,506 1,307 307,304 27,571 Company contributions 2,587 822 4,462 883 Actual return on plan assets (16,658) 50 31,422 737 Benefits paid (14,793) (741) (18,682) (994) Retiree annuity purchase (151,341) — — — Settlements — — — (28,560) Admin expenses paid — — — (40) Non-U.S. currency movement — (38) — 1,710

End of year 144,301 1,400 324,506 1,307

Funded status $ (33,936) $(37,746) $ (38,520) $(38,046)

The following table provides amounts recorded within the account line items of the statements of financial position as of December 31: 2018 2017 United States Foreign United States Foreign (in thousands) Retirement plans assets $ 16,883 $ — $ 17,491 $ — Accrued employees’ compensation and withholdings (2,676) (852) (2,524) (863) Retirement plans liabilities (48,143) (36,894) (53,487) (37,183)

Funded status $ (33,936) $(37,746) $ (38,520) $(38,046)

84

Table of Contents

The following table provides amounts recognized in accumulated other comprehensive income as of December 31: 2018 2017 United States Foreign United States Foreign (in thousands) Prior service cost, before tax $ — $ — $ 58 $ — Deferred taxes 560 — 539 —

Total recognized in other comprehensive income, net of tax $ 560 $ — $ 597 $ —

The accumulated benefit obligation for the United States defined benefit pension plans was $172.8 million and $354.3 million at December 31, 2018and 2017, respectively. The accumulated benefit obligation for foreign defined benefit pension plans was $35.6 million and $34.7 million at December 31,2018 and 2017, respectively.

Information for pension plans with an accumulated benefit obligation in excess of plan assets as of December 31: 2018 2017 United States Foreign United States Foreign (in millions) Projected benefit obligation $ 50.8 $ 39.1 $ 56.0 $ 39.4 Accumulated benefit obligation 48.6 35.6 51.6 34.7 Fair value of plan assets — 1.4 — 1.3

Expense

For the years ended December 31, 2018, 2017, and 2016, Teradyne’s net periodic pension (income) cost was comprised of the following: 2018 2017 2016

UnitedStates Foreign

UnitedStates Foreign

UnitedStates Foreign

(in thousands) Components of Net Periodic Pension (Income) Cost: Service cost $ 2,196 $ 786 $ 2,239 $ 818 $ 2,302 $ 761 Interest cost 8,940 687 13,151 852 13,630 1,185 Expected return on plan assets (9,049) (19) (12,008) (165) (13,830) (443) Amortization of prior service cost 58 — 70 — 96 — Net actuarial (gain) loss (4,429) 743 (6,712) (310) (4,013) 815 Settlement loss 345 — — — — —

Total net periodic pension (income) cost $(1,939) $2,197 $ (3,260) $1,195 $ (1,815) $2,318

Changes in Plan Assets and Benefit Obligations Recognized in OtherComprehensive Income:

Reversal of amortization items: Prior service cost (58) — (70) — (96) —

Total recognized in other comprehensive income (58) — (70) — (96) —

Total recognized in net periodic pension (income) cost and other comprehensiveincome $(1,997) $2,197 $ (3,330) $1,195 $ (1,911) $2,318

85

Table of Contents

Weighted Average Assumptions to Determine Net Periodic Pension Cost at January 1: 2018 2017 2016 United States Foreign United States Foreign United States Foreign Discount rate 3.4% 1.8% 3.9% 1.8% 4.0% 2.3% Expected return on plan assets 4.3 1.5 4.0 2.0 4.8 2.0 Salary progression rate 2.3 2.7 2.6 2.7 2.7 3.2

Weighted Average Assumptions to Determine Pension Obligations at December 31: 2018 2017 United States Foreign United States Foreign Discount rate 4.1% 1.8% 3.4% 1.8% Salary progression rate 2.3 2.6 2.3 2.7

In developing the expected return on plan assets assumption, Teradyne evaluates input from its investment manager and pension consultants,including their forecast of asset class return expectations. Teradyne believes that 4.25% was an appropriate rate to use for fiscal 2018 for the U.S. QualifiedPension Plan (“U.S. Plan”).

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 theyoccur 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 anyinterim remeasurement of the plans.

The discount rate utilized to determine future pension obligations for the U.S. Plan is based on FTSE Pension Index adjusted for the plan’s expectedcash flows and was 4.15% at December 31, 2018, up from 3.4% at December 31, 2017.

Plan Assets

As of December 31, 2018, the fair value of Teradyne’s pension plans’ assets totaled $145.7 million of which $144.3 million was related to the U.S.Plan and $1.4 million was related to the Taiwan defined benefit pension plan. Substantially all of Teradyne’s pension plans’ assets are held in individualtrusts, which were established for the investment of assets of Teradyne’s sponsored retirement plans.

The following table provides weighted average pension asset allocation by asset category at December 31, 2018 and 2017: 2018 2017 United States Foreign United States Foreign Fixed income securities 94.0% — % 88.1% — % Equity securities 5.0 — 9.9 — Other 1.0 100.0 2.0 100.0

100.0% 100.0% 100.0% 100.0%

The assets of the U.S. Plan are overseen by the Teradyne Fiduciary Committee which is comprised of members of senior management drawn fromappropriate diversified levels of the management team. The Fiduciary Committee is responsible for setting the policy that provides the framework formanagement of the U.S. Plan assets. In accordance with its responsibilities, the Fiduciary Committee meets on a regular basis to review the performance ofthe U.S. Plan assets and compliance with the investment policy. The policy sets forth

86

Table of Contents

an investment structure for managing U.S. Plan assets, including setting the asset allocation ranges, which are expected to provide an appropriate level ofoverall diversification required to maximize the long-term return on plan assets for a prudent and reasonable level of risk given prevailing marketconditions, total investment return over the long term, and preservation of capital, while maintaining sufficient liquidity to pay the benefits of the U.S. Plan.The investment portfolio will not, at any time, have a direct investment in Teradyne stock. It may have indirect investment in Teradyne stock, if one of thefunds selected by the investment manager invests in Teradyne stock. In developing the asset allocation ranges, third party asset allocation studies areperiodically performed that consider the current and expected positions of the plan assets and funded status. Based on this study and other appropriateinformation, the Fiduciary Committee establishes asset allocation ranges taking into account acceptable risk targets and associated returns. The investmentreturn objectives are to avoid excessive volatility and produce a rate of return that at least matches the Policy Index identified below. The manager’sinvestment performance is reviewed at least annually. Results for the total portfolio and for each major category of assets are evaluated in comparison withappropriate market indices and the Policy Index.

The target asset allocation and the index for each asset category for the U.S. Plan, per the investment policy, are as follows:

Asset Category: Policy Index: Target

Allocation U.S. corporate fixed income Barclays U.S. Corporate A or Better Index 75% Global equity MSCI World Minimum Volatility Index 5 U.S. government fixed income Barclays U.S. 20+ Year Treasury Strips Index 14 High yield fixed income Barclays U.S. Corporate High Yield 2% Issuer Cap Index 5 Cash Citigroup Three Month U.S. Treasury Bill Index 1

Teradyne’s U.S. Plan invests primarily in common trust funds. Units held in the common trust funds are valued at the unit price as reported by theinvestment manager based on the asset value of the underlying investments; underlying investments in equity securities are valued at the last reported salesprice, and underlying investments in fixed-income securities are generally valued using methods based upon market transactions for comparable securities.

In 2017, the U.K. defined benefit pension was terminated and the obligations and assets of the plan were transferred to an insurance company.

During the year ended December 31, 2018, $2.7 million of pension assets were transferred out of Level 3 to Level 2. During the year endedDecember 31, 2017, there were no transfers of pension assets in or out of Level 1, Level 2 or Level 3.

The fair value of pension plan assets by asset category and by level at December 31, 2018 and December 31, 2017 were as follows: December 31, 2018 United States Foreign Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total (in thousands) Fixed income securities:

Corporate debt securities $ — $ 115,424 $ — $ 115,424 $ — $ — $ — $ — U.S. government securities — 20,176 — 20,176 — — — —

Global equity — 7,252 — 7,252 — — — — Other — — — — — 1,400 — 1,400 Cash and cash equivalents 1,449 — — 1,449 — — — —

Total $1,449 $142,852 $ — $144,301 $ — $1,400 $ — $1,400

87

Table of Contents

December 31, 2017 United States Foreign Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total (in thousands) Fixed income securities:

Corporate debt securities $ — $260,294 $ — $260,294 $ — $ — $ — $ — U.S. government securities — 25,709 — 25,709 — — — —

Global equity — 32,120 — 32,120 — — — — Group annuity insurance contracts — — 3,166 3,166 — — — — Other — — — — — 1,307 — 1,307 Cash and cash equivalents 3,217 — — 3,217 — — — —

Total $3,217 $318,123 $3,166 $324,506 $ — $1,307 $ — $1,307

The pension plan assets identified as Level 3 above are related to group annuity insurance contracts held by the U.S. Plan.

Changes in the fair value of Level 3 group annuity insurance contracts for the years ended December 31, 2018 and 2017 were as follows: Group Annuity Insurance Contracts (in thousands) Balance at December 31, 2016 $ 29,456

Settlements (28,560) Interest and market value adjustments 959 Benefits paid (244) Other (61) Non-U.S. currency movement 1,616

Balance at December 31, 2017 3,166 Transfer out of Level 3 (2,658) Purchases of retiree annuity insurance contracts (512) Interest and market value adjustments 59 Benefits paid (40) Other (15)

Balance at December 31, 2018 $ —

Contributions

Teradyne’s funding policy is to make contributions to the plans in accordance with local laws and to the extent that such contributions are taxdeductible. During 2018, Teradyne contributed $2.6 million to the U.S. supplemental executive defined benefit pension plan and $0.8 million to certainqualified plans for non-U.S. subsidiaries. During 2017, Teradyne contributed $1.9 million to the U.S. Plan, $2.6 million to the U.S. supplemental executivedefined benefit pension plan and $0.9 million to certain qualified plans for non-U.S. subsidiaries. In 2019, contributions to the U.S. supplemental executivedefined benefit pension plan and certain qualified plans from non-U.S. subsidiaries will be approximately $2.7 million and $0.9 million, respectively.

88

Table of Contents

Expected Future Pension Benefit Payments

Future benefit payments are expected to be paid as follows: United States Foreign (in thousands) 2019 $ 6,903 $ 874 2020 7,133 1,522 2021 8,026 905 2022 8,863 888 2023 9,584 1,199 2024-2028 57,120 5,921

Postretirement Benefit Plans

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

The December 31 balances of the postretirement assets and obligations are shown below: 2018 2017 (in thousands) Assets and Obligations Change in benefit obligation: Projected benefit obligation:

Beginning of year $ 6,177 $ 5,510 Service cost 39 34 Interest cost 196 201 Actuarial loss 25 398 Special termination benefits 3,708 591 Benefits paid (889) (557)

End of year 9,256 6,177

Change in plan assets: Fair value of plan assets:

Beginning of year — — Company contributions 889 557 Benefits paid (889) (557)

End of year — —

Funded status $(9,256) $(6,177)

The following table provides amounts recorded within the account line items of financial position as of December 31: 2018 2017 (in thousands) Accrued employees’ compensation and withholdings $(1,310) $ (591) Retirement plans liability (7,946) (5,586)

Funded status $(9,256) $(6,177)

89

Table of Contents

The following table provides amounts recognized in accumulated other comprehensive income as of December 31: 2018 2017 (in thousands) Prior service credit, before tax $ (249) $ (622) Deferred taxes (1,641) (1,472)

Total recognized in other comprehensive income, net of tax $(1,890) $(2,094)

The estimated portion of prior service credit remaining in accumulated other comprehensive income that is expected to be recognized as a componentof net periodic postretirement benefit income in 2019 is $(0.2) million.

Expense

For the years ended December 31, 2018, 2017, and 2016, Teradyne’s net periodic postretirement benefit cost (income) was comprised of thefollowing: 2018 2017 2016 (in thousands) Components of Net Periodic Postretirement Benefit Cost (income): Service cost $ 39 $ 34 $ 37 Interest cost 196 201 218 Amortization of prior service credit (373) (496) (607) Net actuarial loss 25 398 5 Special termination benefits 3,708 591 —

Total net periodic postretirement benefit cost (income) 3,595 728 (347)

Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income: Prior service cost — — (93) Reversal of amortization items:

Prior service credit 373 496 607

Total recognized in other comprehensive income 373 496 514

Total recognized in net periodic postretirement benefit cost (income) and other comprehensive income $3,968 $1,224 $ 167

Weighted Average Assumptions to Determine Net Periodic Postretirement Benefit Income as of January 1: 2018 2017 2016 Discount rate 3.4% 3.9% 3.9% Initial health care cost trend rate 7.9 7.3 7.5 Ultimate health care cost trend rate 4.5 5.0 5.0 Year in which ultimate health care cost trend rate is reached 2026 2023 2023

Weighted Average Assumptions to Determine Postretirement Benefit Obligation as of December 31: 2018 2017 2016 Discount rate 4.0% 3.4% 3.9% Initial medical trend 7.5 7.9 7.3 Ultimate health care trend 4.5 4.5 5.0 Medical cost trend rate decrease to ultimate rate in year 2026 2026 2023

90

Table of Contents

Assumed health care trend rates could have a significant effect on the amounts reported for health care plans. A one percentage point change in theassumed health care cost trend rates for the year ended December 31, 2018 would have the following effects:

1 PercentagePoint

Increase

1 PercentagePoint

Decrease (in thousands) Effect on total service and interest cost components $ 7 $ (7) Effect on postretirement benefit obligations 181 (171)

Expected Future Benefit Payments

Future benefit payments are expected to be paid as follows: Benefit Payments (in thousands) 2019 $ 1,310 2020 1,234 2021 1,181 2022 984 2023 811 2024-2028 2,364

O. STOCK-BASED COMPENSATION

Stock Compensation Plans

Under Teradyne’s stock compensation plans, Teradyne grants stock options, restricted stock units and performance-based restricted stock units, andemployees are eligible to purchase Teradyne’s common stock through its Employee Stock Purchase Plan (“ESPP”).

Stock options to purchase Teradyne’s common stock at 100% of the fair market value on the grant date vest in equal annual installments over fouryears from the grant date and have a maximum term of seven years.

Time-based restricted stock unit awards granted to employees vest in equal annual installments over four years. Restricted stock unit awards grantedto non-employee directors vest in full, on the earlier of (a) the first anniversary of the grant date or (b) the date of the following year’s Annual Meeting ofShareholders. Teradyne expenses the cost of the restricted stock unit awards subject to time based vesting, which is determined to be the fair market value ofthe shares at the date of grant, ratably over the period during which the restrictions lapse.

Teradyne grants performance-based restricted stock units (“PRSUs”) to its executive officers with a performance metric based on relative totalshareholder return (“TSR”). For TSR grants issued in 2018, 2017, and 2016, Teradyne’s three-year TSR performance is measured against the New YorkStock Exchange (“NYSE”) Composite Index. The final number of TSR PRSUs that vest will vary based upon the level of performance achieved from 200%to 0% of the target shares capped at four times the grant date value. The TSR PRSUs will vest upon the three-year anniversary of the grant date. The TSRPRSUs are valued using a Monte Carlo simulation model. The number of units expected to be earned, based upon the achievement of the TSR marketcondition, is factored into the grant date Monte Carlo valuation. Compensation expense is recognized on a straight-line basis over the shorter of the three-year service period or the period from the grant to the date described in the retirement provisions below. Compensation expense for employees meeting theretirement provisions prior to the grant date will be recognized in full on the date of the grant. Compensation expense is recognized regardless of theeventual number of units that are earned based upon the market condition, provided

91

Table of Contents

the executive officer remains an employee at the end of the three-year period. Compensation expense is reversed if at any time during the three-year serviceperiod the executive officer is no longer an employee, subject to the retirement and termination eligibility provisions noted below.

In January 2018, 2017, and 2016, Teradyne granted PRSUs to its executive officers with a performance metric based on three-year cumulative non-GAAP profit before interest and tax (“PBIT”) as a percent of Teradyne’s revenue. Non-GAAP PBIT is a financial measure equal to GAAP income fromoperations less restructuring and other, net; amortization of acquired intangible assets; acquisition and divestiture related charges or credits; pensionactuarial gains and losses; non-cash convertible debt interest expense; and other non-recurring gains and charges. The final number of PBIT PRSUs that vestwill vary based upon the level of performance achieved from 200% to 0% of the target shares. The PBIT PRSUs will vest upon the three-year anniversary ofthe grant date. Compensation expense is recognized on a straight-line basis over the three-year service period. Compensation expense is recognized basedon the number of units that are earned based upon the three-year Teradyne PBIT as a percent of Teradyne’s revenue, provided the executive officer remainsan employee at the end of the three-year period subject to the retirement and termination eligibility provisions noted below.

If a PRSU recipient’s employment ends prior to the determination of the performance percentage due to (1) permanent disability or death or(2) retirement or termination other than for cause, after attaining both at least age sixty and at least ten years of service, then all or a portion of the recipient’sPRSUs (based on the actual performance percentage achieved on the determination date) will vest on the date the performance percentage is determined.Except as set forth in the preceding sentence, no PRSUs will vest if the executive officer is no longer an employee at the end of the three-year period.

During 2018, 2017, and 2016, Teradyne granted 0.1 million TSR PRSUs, with a grant date fair value of $54.85, $35.66 and $20.29, respectively. Thefair value was estimated using the Monte Carlo simulation model with the following assumptions: 2018 2017 2016 Risk-free interest rate 2.2% 1.5% 1.0% Teradyne volatility-historical 26.8% 26.6% 27.0% NYSE Composite Index volatility-historical 12.4% 13.4% 13.1% Dividend yield 0.8% 1.0% 1.2%

Expected volatility was based on the historical volatility of Teradyne’s stock and the NYSE Composite Index for the 2018, 2017 and 2016 grants, overthe most recent three-year period. The risk-free interest rate was determined using the U.S. Treasury yield curve in effect at the time of grant. Dividend yieldfor 2018, 2017 and 2016 was based upon an estimated annual dividend amount of $0.36 per share for 2018, $0.28 per share for 2017 and $0.24 per share for2016 divided by Teradyne’s stock price on the grant date of $47.70 for the 2018 grant, $28.56 for the 2017 grant, and $19.43 for the 2016 grant.

During 2018, 2017, and 2016, Teradyne granted 0.1 million PBIT PRSUs with a grant date fair value of $46.62, $27.72 and $18.71, respectively.

During 2018, 2017, and 2016, Teradyne granted 0.6 million, 0.8 million, and 1.2 million of service-based restricted stock unit awards to employees,respectively, at a weighted average grant date fair value of $45.92, $28.19, and $18.88, respectively.

During 2018, 2017, and 2016, Teradyne granted 0.1 million of service-based restricted stock unit awards to non-employee directors at a weightedaverage grant date fair value of $35.81, $34.48, and $18.71, respectively.

During 2018, 2017, and 2016, Teradyne granted 0.1 million of service-based stock options to executive officers at a weighted average grant date fairvalue of $12.17, $7.13, and $5.30, respectively.

92

Table of Contents

The fair value of the stock options at grant date was estimated using the Black-Scholes option-pricing model with the following assumptions: 2018 2017 2016 Expected life (years) 5.0 5.0 5.0 Risk-free interest rate 2.4% 2.0% 1.4% Volatility-historical 26.4% 27.8% 32.9% Dividend yield 0.80% 1.00% 1.20%

Teradyne determined the stock option’s expected life based upon historical exercise data for executive officers, the age of executives and the terms ofthe stock option award. Volatility was determined using historical volatility for a period equal to the expected life. The interest rate was determined using theU.S. Treasury yield curve in effect at the time of grant. Dividend yield was based upon an estimated annual dividend amount of $0.36 per share for 2018,$0.28 per share for 2017, and $0.24 per share for 2016 divided by Teradyne’s stock price on the grant date of $47.70 for the 2018 grants, $28.56 for the2017 grants, and $19.43 for the 2016 grants.

Stock compensation plan activity for the years 2018, 2017, and 2016 is as follows: 2018 2017 2016 (in thousands) Restricted Stock Units: Non-vested at January 1 3,174 3,778 4,070

Awarded 790 939 1,471 Vested (1,382) (1,434) (1,530) Forfeited (128) (109) (233)

Non-vested at December 31 2,454 3,174 3,778

Stock Options: Outstanding at January 1 531 926 1,121

Granted 69 111 130 Exercised (94) (501) (324) Expired — (5) (2)

Outstanding at December 31 506 531 926

Vested and expected to vest at December 31 506 531 926

Exercisable at December 31 256 233 598

Total shares available for the years 2018, 2017, and 2016: 2018 2017 2016 (in thousands) Shares available: Available for grant at January 1 8,605 9,546 10,914

Options granted (69) (111) (130) Restricted stock units awarded (790) (939) (1,471) Restricted stock units forfeited 128 109 233

Available for grant at December 31 7,874 8,605 9,546

93

Table of Contents

Weighted average restricted stock unit award date fair value information for the years 2018, 2017, and 2016 is as follows: 2018 2017 2016 Non-vested at January 1 $21.71 $18.27 $17.66

Awarded 45.99 28.91 18.95 Vested 20.20 17.90 17.36 Forfeited 24.67 20.35 17.80

Non-vested at December 31 $29.22 $21.71 $18.27

Restricted stock unit awards aggregate intrinsic value information at December 31 for the years 2018, 2017, and 2016 is as follows: 2018 2017 2016 (in thousands) Vested $63,688 $ 40,649 $30,008 Outstanding 77,015 132,875 95,952 Expected to vest 77,187 130,594 91,871

Restricted stock units weighted average remaining contractual terms (in years) information at December 31, for the years 2018, 2017, and 2016 is asfollows: 2018 2017 2016 Outstanding 0.92 1.00 1.04 Expected to vest 0.91 0.99 1.03

Weighted average stock options exercise price information for the year ended December 31, 2018 is as follows: 2018 Outstanding at January 1 $13.92

Options granted 47.70 Options exercised 10.89

Outstanding at December 31 19.06 Exercisable at December 31 8.31

The total cash received from employees as a result of employee stock options exercises during the years ended December 31, 2018, 2017, and 2016,was $1.0 million, $6.8 million and $2.9 million, respectively. In connection with these exercises, the tax benefit realized by Teradyne for the years endedDecember 31, 2018, 2017, and 2016, was $0.4 million, $2.5 million, and $0.8 million, respectively.

Stock option aggregate intrinsic value information for the years ended December 31, 2018, 2017, and 2016 is as follows: 2018 2017 2016 (in thousands) Exercised $2,960 $ 8,035 $ 3,729 Outstanding 7,359 14,831 12,468 Vested and expected to vest 7,359 14,831 12,468 Exercisable 5,905 9,076 10,217

94

Table of Contents

Stock options weighted average remaining contractual terms (in years) information at December 31, for the years 2018, 2017, and 2016 is as follows: 2018 2017 2016 Outstanding 3.6 4.1 3.9 Vested and expected to vest 3.6 4.1 3.9 Exercisable 2.4 2.8 3.2

Significant option groups outstanding at December 31, 2018 and related weighted average price and remaining contractual life information follow: Options Outstanding Options Exercisable

Range Of Exercise Prices

Weighted-Average

RemainingContractual

Life(Years) Shares

Weighted-Average

Exercise Price Shares

Weighted-Average

Exercise Price (shares in thousands) $1.48 – $2.58 1.23 67 $ 1.83 67 $ 1.83 $2.67 – $3.28 2.20 103 2.69 103 2.69 $7.71 – $19.43 3.41 166 18.59 68 18.02 $28.56 – $47.70 5.62 170 36.30 18 28.56

506 $ 19.06 256 $ 8.31

As of December 31, 2018, total unrecognized expense related to non-vested restricted stock unit awards and stock options was $44 million, and isexpected to be recognized over a weighted average period of 2.4 years.

Employee Stock Purchase Plan

Under the ESPP, eligible employees may purchase shares of common stock through regular payroll deductions of up to 10% of their compensation, toa maximum of shares with a fair market value of $25,000 per calendar year, not to exceed 6,000 shares. Under the plan, the price paid for the common stockis equal to 85% of the stock price on the last business day of the six-month purchase period.

In July 2018, 0.3 million shares of common stock were issued to employees who participated in the plan during the first half of 2018 at the price of$32.36 per share. In January 2019, Teradyne issued 0.4 million shares of common stock to employees who participated in the plan during the second half of2018 at the price of $26.67 per share.

In July 2017, 0.3 million shares of common stock were issued to employees who participated in the plan during the first half of 2017 at the price of$25.53 per share. In January 2018, Teradyne issued 0.3 million shares of common stock to employees who participated in the plan during the second half of2017 at the price of $35.59 per share.

In July 2016, 0.5 million shares of common stock were issued to employees who participated in the plan during the first half of 2016 at the price of$16.74 per share. In January 2017, Teradyne issued 0.4 million shares of common stock to employees who participated in the plan during the second half of2016 at the price of $21.59 per share.

As of December 31, 2018, there were 2.5 million shares available for grant under the ESPP.

95

Table of Contents

The following table provides the effect to income from operations for recording stock-based compensation for the years ended December 31, 2018,2017, and 2016: 2018 2017 2016 (in thousands) Cost of revenues $ 3,129 $ 3,212 $ 3,153 Engineering and development 9,181 9,370 9,458 Selling and administrative 21,267 21,515 18,139

Stock-based compensation 33,577 34,097 30,750 Income tax benefit (12,036) (10,462) (8,752)

Total stock-based compensation expense after income taxes $ 21,541 $ 23,635 $21,998

P. SAVINGS PLAN

Teradyne sponsors a defined contribution employee retirement savings plan (“Savings Plan”) covering substantially all U.S. employees. Under theSavings Plan, employees may contribute up to 20% of their compensation (subject to Internal Revenue Service limitations). The Savings Plan provides for adiscretionary employer match that is determined each year. In 2018, 2017 and 2016, Teradyne matched 100% of eligible employee contributions up to 4% oftheir compensation for employees not accruing benefits in the U.S. Qualified Pension Plan. There was no match for employees still actively accruingbenefits in the U.S. Qualified Pension Plan. Teradyne’s contributions vest 25% per year for the first four years of employment, and contributions for thoseemployees with four years of service vest immediately.

In addition, Teradyne established an unfunded U.S. Supplemental Savings Plan to provide savings benefits in excess of those allowed by theEmployee Retirement Income Security Act of 1974 and the Internal Revenue Code. The provisions of this plan are the same as the Savings Plan. Theliability for the U.S. Supplemental Savings Plan at December 31, 2018 and 2017, was $24.4 million and $23.4 million, respectively, and is included inretirement plan liabilities. Teradyne also established defined contribution savings plans for its foreign employees. Under Teradyne’s savings plans, amountscharged to the statements of operations for the years ended December 31, 2018, 2017, and 2016 were $17.2 million, $15.3 million, and $14.5 million,respectively.

Q. INCOME TAXES

The components of income (loss) before income taxes and the provision (benefit) for income taxes as shown in the consolidated statements ofoperations were as follows: 2018 2017 2016 (in thousands) Income (loss) before income taxes:

U.S. $189,691 $ 76,699 $ (341,018) Non-U.S. 278,110 447,713 285,958

$467,801 $ 524,412 $ (55,060)

Provision (benefit) for income taxes: Current:

U.S. Federal $ (59,122) $ 162,679 $ 7,750 Non-U.S. 45,083 64,313 41,579 State 1,721 2,623 1,968

(12,318) 229,615 51,297

Deferred: U.S. Federal 29,252 43,687 (51,482) Non-U.S. (1,243) (6,476) (9,240) State 331 (106) (2,214)

28,340 37,105 (62,936)

Total provision (benefit) for income taxes: $ 16,022 $ 266,720 $ (11,639)

96

Table of Contents

Income tax expense for 2018 and 2017 totaled $16.0 and $266.7 million, respectively. Income tax benefit for 2016 totaled $11.6 million. The effectivetax rate for 2018, 2017 and 2016 was 3.4%, 50.9%, and 21.1%, respectively.

On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”), making significant changes to the InternalRevenue Code. The Tax Reform Act has significant direct and indirect implications for accounting for income taxes under ASC 740, “Accounting forIncome Taxes” some of which could not be calculated with precision until further clarification and guidance was made available from tax authorities,regulatory bodies or the FASB. In light of this uncertainty, on December 22, 2017 the SEC issued Staff Accounting Bulletin (“SAB”) No. 118, “Income TaxAccounting Implications of the Tax Cuts and Jobs Act,” to address uncertainty in the application of U.S. GAAP when the registrant does not have thenecessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income taxeffects of the Tax Reform Act. In accordance with SAB 118, Teradyne recorded a provisional amount of $186.0 million of additional income tax expense inthe fourth quarter of 2017 which represented Teradyne’s best estimate of the impact of the Tax Reform Act in accordance with Teradyne’s understanding ofthe Tax Reform Act and available guidance as of that date. The $186.0 million was primarily composed of expense of $161.0 million related to the one-timetransition tax on the mandatory deemed repatriation of foreign earnings, $33.6 million of expense related to the remeasurement of certain deferred tax assetsand liabilities based on the rates at which they are expected to reverse in the future, and a benefit of $10.3 million associated with the impact of correlativeadjustments on uncertain tax positions. In accordance with the requirements of SAB 118, in the fourth quarter of 2018 Teradyne completed its analysis ofthe effect of the Tax Reform Act based on the application of the most recently available guidance as of December 31, 2018 and recorded $49.5 million ofnet income tax benefit. The net benefit consisted of $51.7 million of benefit resulting from a reduction in the estimate of the one-time transition tax on themandatory deemed repatriation of foreign earnings and an expense of $2.2 million associated with the impact of correlative adjustments on uncertain taxpositions.

The Tax Reform Act also includes a new U.S. tax base erosion provision, the global intangible low-taxed income (“GILTI”) provision, which imposesa tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. Teradyne has made an accounting policy election to accountfor GILTI as a component of tax expense in the period in which Teradyne is subject to the rules and therefore did not provide any deferred tax impacts ofGILTI in its consolidated financial statements.

The decrease in the effective tax rate from 2017 to 2018 was primarily attributable to the $186.0 million of income tax expense recorded in the fourthquarter of 2017 as a provisional estimate of the impact of the Tax Reform Act and the $51.7 million of income tax benefit recorded in the fourth quarter of2018 resulting from a reduction in the estimate of the one-time transition tax on the mandatory deemed repatriation of foreign earnings and an expense of$2.2 million associated with the impact of correlative adjustments on uncertain tax positions. The change in the effective tax rate from 2017 to 2018 wasalso impacted by a shift in the geographic distribution of income which increased income subject to taxation in the U.S. relative to lower tax ratejurisdictions, the benefit of the U.S. foreign derived intangible income deduction and increases in discrete benefit from non-taxable foreign exchange gainsand losses.

The increase in the effective tax rate from 2016 to 2017 was primarily attributable to the $186.0 million of income tax expense recorded in the fourthquarter of 2017 as a provisional estimate of the impact of the Tax Reform Act. The change in the effective rate from 2016 to 2017 was also impacted by theU.S. non-deductible goodwill impairment charge recorded in 2016, a shift in the geographic distribution of income which increased income subject totaxation in the U.S. relative to lower tax rate jurisdictions, decreases in the discrete benefits from tax reserve releases, increases in discrete expense fromnon-taxable foreign exchange gains and losses and an increase in the discrete benefit from stock-based compensation.

97

Table of Contents

A reconciliation of the effective tax rate for the years 2018, 2017, and 2016 is as follows: 2018 2017 2016 U.S. statutory federal tax rate 21.0% 35.0% 35.0% U.S. transition tax (10.5) 28.7 — U.S. foreign derived intangible income (1.8) — — Impact of rate change on deferred tax 0.3 6.9 — Uncertain tax positions 1.0 1.7 (2.6) Foreign taxes (2.0) (16.3) 78.0 Foreign tax credits (2.2) (2.2) 49.1 U.S. research and development credit (2.2) (1.6) 15.8 Equity compensation (1.2) (0.8) (2.7) State income taxes, net of federal tax benefit 0.1 (0.4) 2.3 Domestic production activities deduction — (0.3) 2.3 Goodwill impairment — — (162.1) U.S. alternative minimum tax credit — — 3.7 Inventory cost capitalization — — 1.8 Other, net 0.9 0.2 0.5

3.4% 50.9% 21.1%

Teradyne qualifies for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Boardunder which certain headcount and spending requirements must be met. The tax savings attributable to the Singapore tax holiday for the years endedDecember 31, 2018, 2017 and 2016 were $11.9 million or $0.06 per diluted share, $24.8 million or $0.12 per diluted share and $17.0 million or $0.08 perdiluted share, respectively. The tax holiday is scheduled to expire on December 31, 2020.

Significant components of Teradyne’s deferred tax assets (liabilities) as of December 31, 2018 and 2017 were as follows: 2018 2017 (in thousands) Deferred tax assets:

Tax credits $ 69,091 $ 76,083 Accruals 23,449 27,508 Pension liabilities 20,826 22,602 Inventory valuations 18,514 17,793 Deferred revenue 9,130 9,016 Equity compensation 7,190 6,861 Vacation accrual 4,772 4,747 Net operating loss carryforwards 3,658 5,440 Marketable securities 962 — Other 685 713

Gross deferred tax assets 158,277 170,763 Less: valuation allowance (69,852) (63,919)

Total deferred tax assets $ 88,425 $106,844

Deferred tax liabilities: Intangible assets $ (24,211) $ (16,120) Depreciation (14,028) (12,293) Marketable securities — (1,125)

Total deferred tax liabilities $ (38,239) $ (29,538)

Net deferred assets $ 50,186 $ 77,306

98

Table of Contents

As of December 31, 2018 and 2017, Teradyne evaluated the likelihood that it would realize the deferred income taxes to offset future taxable incomeand concluded that it is more likely than not that a substantial majority of its deferred tax assets will be realized through consideration of both the positiveand negative evidence. At December 31, 2018 and 2017, Teradyne maintained a valuation allowance for certain deferred tax assets of $69.9 million and$63.9 million, respectively, primarily related to state net operating losses and state tax credit carryforwards, due to the uncertainty regarding theirrealization. Adjustments could be required in the future if Teradyne estimates that the amount of deferred tax assets to be realized is more or less than the netamount recorded.

At December 31, 2018, Teradyne had operating loss carryforwards that expire in the following years:

StateOperating LossCarryforwards

ForeignOperating

LossCarryforwards

(in thousands) 2019 $ 258 $ — 2020 269 — 2021 2,977 — 2022 5,749 — 2023 6,241 — 2024-2028 4,672 — 2029-2033 22,724 44 Beyond 2033 5,305 72 Non-expiring — 4,389

Total $ 48,195 $ 4,505

Teradyne has approximately $98.4 million of tax credit carryforwards including federal business tax credits of approximately $0.9 million whichexpire in 2028, and state tax credits of $97.5 million, of which $55.6 million do not expire and the remainder expires in the years 2019 through 2038.

Teradyne’s gross unrecognized tax benefits for the years ended December 31, 2018, 2017, and 2016 were as follows: 2018 2017 2016 (in thousands) Beginning balance, as of January 1 $36,263 $ 38,958 $36,792 Additions:

Tax positions for current year 4,716 8,208 9,766 Tax positions for prior years 2,626 199 187

Reductions: Tax positions for prior years (153) (10,573) (1,960) Expiration of statutes (57) (325) (3,532) Settlements with tax authorities — (204) (2,295)

Ending balance as of December 31 $43,395 $ 36,263 $38,958

Current year and prior year additions include assessment of potential transfer pricing issues worldwide, federal and state tax credits and incentives,capitalization rules, domestic production activities deductions and correlative effects of the transition tax charge. Of the $43.4 million of unrecognized taxbenefits as of December 31, 2018, $30.7 million would impact the consolidated income tax rate if ultimately recognized. The remaining $12.6 millionwould impact deferred taxes if recognized.

99

Table of Contents

On February 4, 2019, the IRS issued a closing audit letter related to the U.S. Federal income tax return for the year ended December 31, 2015indicating that there was no change to the reported tax. As a result of the completion of the 2015 audit, Teradyne anticipates recording a $33.8 millionreduction in the balance of unrecognized tax benefits in the first quarter of 2019 primarily composed of federal and state reserves related to transfer pricingand research credits. Of the $33.8 million reduction in the balance of unrecognized tax benefits, $5.9 million will be offset by valuation allowance. Theremaining $27.9 million, net of a $2.0 million reduction for the federal benefit of state reserves, will be recognized as an income tax benefit. Teradyneestimates that it is reasonably possible that the balance of unrecognized tax benefits as of December 31, 2018 may decrease an additional $0.2 million in thenext twelve months, as a result of the lapse of statutes of limitation.

Teradyne records all interest and penalties related to income taxes as a component of income tax expense. Accrued interest and penalties related toincome tax items at December 31, 2018 and 2017 amounted to $0.3 million and $0.3 million, respectively. For the years ended December 31, 2018, 2017,and 2016, expense of $0.1 million, benefit of $0.1 million and benefit of $0.1 million, respectively, was recorded for interest and penalties related to incometax items.

Teradyne is subject to U.S. federal income tax, as well as income tax in multiple state, local and foreign jurisdictions. As of December 31, 2018, allmaterial state and local income tax matters have been concluded through 2013, all material federal income tax matters have been concluded through 2014and all material foreign income tax matters have been concluded through 2012. However, in some jurisdictions, including the United States, operating lossesand tax credits may be subject to adjustment until such time as they are utilized and the year of utilization is closed to adjustment.

As of December 31, 2018, Teradyne is not permanently reinvested with respect to the unremitted earnings of non-U.S. subsidiaries to the extent thatthose earnings exceed local statutory and operational requirements. Remittance of those earnings is not expected to result in material income tax.

R. OPERATING SEGMENT, GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATION

Teradyne has four reportable segments (Semiconductor Test, System Test, Industrial Automation and Wireless Test). Each of the Semiconductor Test,System Test, and Wireless Test segments is also an individual operating segment. The Industrial Automation reportable segment consists of operatingsegments with discrete financial information, which have been combined into one reportable segment as they share similar economic characteristics, typesof products, production processes, distribution channels, and currency risks. The Semiconductor Test segment includes operations related to the design,manufacturing and marketing of semiconductor test products and services. The System Test segment includes operations related to the design,manufacturing and marketing of products and services for defense/aerospace instrumentation test, storage test and circuit-board test. The IndustrialAutomation segment includes operations related to the design, manufacturing and marketing of collaborative robotic arms, autonomous mobile robots andadvanced robotic control software. The Wireless Test segment includes operations related to the design, manufacturing and marketing of wireless testproducts and services.

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

100

Table of Contents

Segment information for the years ended December 31, 2018, 2017, and 2016 is as follows:

Semiconductor

Test System

Test Industrial

Automation Wireless

Test

CorporateAnd

Other Consolidated (in thousands) 2018

Revenues $ 1,492,417 $216,132 $ 261,452 $ 132,006 $ (1,205) $2,100,802 Income (loss) before taxes (1)(2) 397,645 48,857 7,670 29,052 (15,423) 467,801 Total assets (3) 669,452 88,098 607,502 77,570 1,263,984 2,706,606 Property additions 94,496 3,469 11,188 5,226 — 114,379 Depreciation and amortization expense 58,095 6,430 36,755 5,328 6,616 113,224

2017 Revenues $ 1,662,549 $192,135 $ 170,056 $ 111,866 $ — $2,136,606 Income (loss) before taxes (1)(2) 491,361 10,305 8,763 17,350 (3,368) 524,411 Total assets (3) 597,480 97,018 368,037 59,912 1,987,098 3,109,545 Property additions 87,920 5,976 7,044 4,435 — 105,375 Depreciation and amortization expense 58,901 6,646 25,711 5,392 11,425 108,075

2016 Revenues $ 1,368,169 $189,846 $ 99,031 $ 96,204 $ — $1,753,250 Income (loss) before taxes (1)(2) 311,939 28,916 (16,783) (371,409) (7,723) (55,060) Total assets (3) 557,546 110,361 317,635 62,366 1,714,585 2,762,493 Property additions 70,543 3,788 6,755 4,186 — 85,272 Depreciation and amortization expense 58,087 6,551 26,869 25,921 2,581 120,009

(1) Included in Corporate and Other are: contingent consideration adjustments, pension and postretirement plans actuarial gains (losses), severance

charges, impairment of fixed assets and expenses related to the Japan earthquake, property insurance recovery, interest income, interest expense, netforeign exchange gains (losses), intercompany eliminations and acquisition related charges.

(2) Included in income (loss) before taxes are charges and credits related to restructuring and other, and inventory charges. In 2016, loss before incometaxes in Wireless Test also included charges related to goodwill and acquired intangible assets impairment.

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

Included in the Semiconductor Test segment are charges in the following accounts: For the Year Ended December 31, 2018 2017 2016 (in thousands) Restructuring and other—employee severance $ 8,429 $ 1,779 $ 2,860 Cost of revenues—inventory charge 6,822 4,606 9,656 Restructuring and other—impairment of fixed assets — 1,124 —

Included in the System Test segment are charges in the following accounts: For the Year Ended December 31, 2018 2017 2016 (in thousands) Cost of revenues—inventory charge $ 1,175 $ 1,918 $ 630

101

Table of Contents

Included in the Industrial Automation segment are charges in the following accounts: For the Year Ended December 31, 2018 2017 2016 (in thousands) Restructuring and other—acquisition related expenses and compensation $ 1,163 $ — $ — Cost of revenues—inventory charge 680 — — Restructuring and other—employee severance — 1,414 585

Included in the Wireless Test segment are charges in the following accounts: For the Year Ended December 31, 2018 2017 2016 (in thousands) Cost of revenues—inventory charge $ 2,565 $ 2,190 $ 7,207 Restructuring and other—lease impairment — 972 — Restructuring and other—employee severance — — 2,650 Goodwill impairment charge — — 254,946 Intangible assets impairment charge — — 83,339

Included in Corporate and Other are charges and credits in the following accounts: For the Year Ended December 31, 2018 2017 2016 (in thousands) Restructuring and other—MiR contingent consideration adjustment $ 17,666 $ — $ — Restructuring and other—Universal Robots contingent consideration adjustment (16,679) 7,820 15,346 Restructuring and other—acquisition related expenses 3,422 — — Restructuring and other 872 — — Restructuring and other—expense related to Japan earthquake and impairment of fixed assets — 755 5,051 Restructuring and other—property insurance recovery — (5,064) (5,051)

Information as to Teradyne’s revenues by country is as follows: 2018 2017 2016 (in thousands) Revenues from customers (1):

Taiwan $ 516,322 $ 687,031 $ 653,076 China 348,942 260,451 174,876 United States 282,869 252,516 221,948 Europe 223,207 163,715 117,671 Korea 163,224 206,819 147,882 Japan 158,281 169,093 135,978 Malaysia 122,797 124,048 103,472 Singapore 108,618 101,085 73,172 Philippines 77,996 105,850 54,705 Thailand 59,184 29,566 43,097 Rest of the World 39,362 36,432 27,373

$ 2,100,802 $ 2,136,606 $ 1,753,250

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

102

Table of Contents

In 2018, no single customer accounted for more than 10% of total consolidated revenue. In 2017 and 2016, one customer of Teradyne’sSemiconductor Test segment accounted for 13% and 12%, respectively, of total consolidated revenues. In 2016, a different customer of Teradyne’sSemiconductor Test segment accounted for 12% of total consolidated revenues. Teradyne estimates consolidated revenues driven by a single OEMcustomer, combining direct sales to that customer with sales to the customer’s outsourced semiconductor assembly and test providers (“OSATs”), accountedfor approximately 13%, 22%, and 26% of Teradyne’s consolidated revenues in 2018, 2017, and 2016, respectively.

Long-lived assets by geographic area: United States Foreign(1) Total (in thousands) December 31, 2018 $ 209,368 $ 70,453 $279,821 December 31, 2017 $ 198,855 $ 69,592 $268,447 (1) As of December 31, 2018 and 2017, long-lived assets attributable to Singapore were $19.4 million and $23.6 million, respectively.

S. STOCK REPURCHASE PROGRAM

In January 2015, Teradyne’s Board of Directors authorized a stock repurchase program for up to $500 million of common stock. In 2016, Teradynerepurchased 6.8 million shares of common stock at an average price of $21.39, for a total cost of $146 million. The cumulative repurchases as ofDecember 31, 2016 totaled 22.5 million shares of common stock for $446 million at an average price per share of $19.87.

In December 2016, Teradyne’s Board of Directors cancelled the January 2015 stock repurchase program and approved a new $500 million sharerepurchase authorization which commenced on January 1, 2017. The cumulative repurchases as of December 31, 2017 totaled 5.8 million shares of commonstock for $200 million at an average price per share of $34.30.

In January 2018, Teradyne’s Board of Directors cancelled the December 2016 stock repurchase program and authorized a new stock repurchaseprogram for up to $1.5 billion of common stock. The cumulative repurchases as of December 31, 2018 totaled 21.6 million shares of common stock for$823.5 million at an average price per share of $38.06. Teradyne intends to repurchase $500 million in 2019.

T. SUBSEQUENT EVENTS

In January 2019, Teradyne’s Board of Directors declared a quarterly cash dividend of $0.09 per share to be paid on March 22, 2019 to shareholders ofrecord as of February 22, 2019.

While Teradyne declared a quarterly cash dividend and authorized a share repurchase program, it may reduce or eliminate the cash dividend or sharerepurchase program in the future. Future cash dividends and stock repurchases are subject to the discretion of Teradyne’s Board of Directors which willconsider, among other things, Teradyne’s earnings, capital requirements and financial condition.

103

Table of Contents

SUPPLEMENTARY INFORMATION(Unaudited)

The following sets forth certain unaudited consolidated quarterly statements of operations data for each of Teradyne’s last eight quarters. Inmanagement’s opinion, this quarterly information reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement forthe periods presented. Such quarterly results are not necessarily indicative of future results of operations and should be read in conjunction with the auditedconsolidated financial statements of Teradyne and the notes thereto included elsewhere herein. 2018 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter (1) (2)(5) (3)(5) (4)(5) (in thousands, except per share amounts) Revenues:

Products $403,925 $ 434,051 $ 470,994 $ 420,652 Services 83,542 92,878 95,854 98,906

Total revenues 487,467 526,929 566,848 519,558 Cost of revenues:

Cost of products 180,958 180,777 195,339 170,064 Cost of services 36,677 38,818 37,816 39,959

Total cost of revenues (exclusive of acquired intangible assets amortizationshown separately below) 217,635 219,595 233,155 210,023

Gross profit 269,832 307,334 333,693 309,535

Operating expenses: Selling and administrative 90,505 99,410 100,202 100,552 Engineering and development 74,408 75,342 77,049 74,706 Acquired intangible assets amortization 7,698 9,793 11,142 10,558 Restructuring and other (313) 2,389 1,710 11,446

Total operating expenses 172,298 186,934 190,103 197,262

Income (loss) from operations 97,534 120,400 143,590 112,273 Non-operating (income) expense:

Interest income (5,981) (5,427) (6,213) (9,083) Interest expense 6,890 5,639 5,557 13,182 Other (income) expense, net 805 176 3,405 (2,954)

Income (loss) before income taxes 95,820 120,012 140,841 111,128 Income tax provision (benefit) 8,846 18,975 20,863 (32,662)

Net income (loss) $ 86,974 $ 101,037 $ 119,978 $ 143,790

Net income (loss) per common share—basic $ 0.45 $ 0.53 $ 0.65 $ 0.80

Net income (loss) per common share—diluted $ 0.43 $ 0.52 $ 0.63 $ 0.79

Cash dividend declared per common share $ 0.09 $ 0.09 $ 0.09 $ 0.09

(1) Restructuring and other includes a $3.5 million gain for the decrease in the fair value of the Universal Robots contingent consideration liability,

partially offset by $2.5 million of acquisition related expenses and compensation and $2.4 million of employee severance charges.(2) Restructuring and other includes a $5.0 million gain for the decrease in the fair value of the Universal Robots contingent consideration liability,

partially offset by $3.9 million of employee severance charges and $0.8 million of acquisition related expenses and compensation.

104

Table of Contents

(3) Restructuring and other includes $1.7 million of employee severance charges, $0.8 million of acquisition related expenses and compensation, partiallyoffset by a $0.8 million gain for the decrease in the fair value of the Universal Robots contingent consideration liability.

(4) Restructuring and other includes a $17.7 million fair value adjustment to increase the MiR acquisition contingent consideration, $0.8 million ofemployee severance charges, and $0.5 million acquisition related expenses and compensation, partially offset by a $7.4 million gain for the decreasein the fair value of the Universal Robots contingent consideration liability.

(5) Teradyne recorded pension and post retirement net actuarial (gains) losses of $(0.1) million, $0.3 million and $(3.5) million for the second, third andfourth quarter in 2018, respectively. See Note B: “Accounting Policies” for a discussion of Teradyne’s accounting policy.

2017 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter (1) (2)(5) (3) (4)(5) (in thousands, except per share amounts) Revenues:

Products $373,204 $ 610,356 $ 412,854 $ 388,282 Services 83,709 86,545 90,524 91,133

Total revenues 456,913 696,901 503,378 479,415 Cost of revenues:

Cost of products 154,883 267,752 169,661 168,672 Cost of services 37,014 38,511 38,848 39,813

Total cost of revenues (exclusive of acquired intangible assets amortizationshown separately below) 191,897 306,263 208,509 208,485

Gross profit 265,016 390,638 294,869 270,930

Operating expenses: Selling and administrative 84,792 90,111 86,130 87,880 Engineering and development 75,978 82,270 76,986 72,070 Acquired intangible assets amortization 7,952 8,166 7,028 7,384 Restructuring and other 2,511 2,288 (4,407) 8,970

Total operating expenses 171,233 182,835 165,737 176,304

Income from operations 93,783 207,803 129,132 94,626 Non-operating (income) expense:

Interest income (3,520) (3,292) (4,517) (6,476) Interest expense 5,402 5,509 5,372 5,380 Other (income) expense, net (115) (1,291) 840 (2,362)

Income before income taxes 92,016 206,877 127,437 98,084 Income tax provision 6,795 31,901 24,017 204,007

Net income (loss) $ 85,221 $ 174,976 $ 103,420 $(105,923)

Net income (loss) per common share—basic $ 0.43 $ 0.88 $ 0.52 $ (0.54)

Net income (loss) per common share—diluted $ 0.42 $ 0.87 $ 0.52 $ (0.54)

Cash dividend declared per common share $ 0.07 $ 0.07 $ 0.07 $ 0.07

(1) Restructuring and other includes a $1.3 million charge for a lease impairment of a Wireless Test facility in Sunnyvale, CA, a $0.6 million fair value

adjustment to increase the Universal Robots acquisition contingent consideration, and $0.6 million of employee severance charges.

105

Table of Contents

(2) Restructuring and other includes a $1.5 million charge for a fair value adjustment to increase the Universal Robots acquisition contingentconsideration, and $0.8 million of employee severance charges.

(3) Restructuring and other includes $5.1 million of property insurance recovery related to the Japan earthquake, a $0.4 million credit related topreviously impaired lease termination of a Wireless Test facility in Sunnyvale, CA, and a $0.3 million credit for the decrease in the fair value of theUniversal Robots contingent consideration liability, partially offset by $0.8 million of Japan earthquake related expenses and $0.6 million of employeeseverance charges.

(4) Restructuring and other includes a $6.0 million fair value adjustment to increase the Universal Robots acquisition contingent consideration,$1.8 million of employee severance charges, and $1.1 million of charges for impairment of fixed assets.

(5) Teradyne recorded pension and post retirement net actuarial gains of $2.8 million and $3.8 million for the second and fourth quarter in 2017,respectively. See Note B: “Accounting Policies” for a discussion of Teradyne’s accounting policy.

Item 9: Changes in and disagreements with accountants on accounting and financial disclosure

None. Item 9A: Controls and procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, our management, with the participation of our CEO and CFO, evaluated the effectiveness of ourdisclosure controls and procedures pursuant to Rule 13a-15(b) promulgated under the Exchange Act. Based upon that evaluation, our CEO and CFOconcluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that material informationrequired to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the timeperiods specified in the SEC’s rules and forms, including ensuring that such material information is accumulated and communicated to our management,including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during the fourth fiscal quarter ended December 31, 2018 that has materiallyaffected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined inExchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our CEO and CFO, we conducted anevaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in InternalControl—Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31,2018.

The effectiveness of our internal control over financial reporting as of December 31, 2018 has been audited by PricewaterhouseCoopers LLP, ourindependent registered public accounting firm, as stated in their report which is included under Item 8 of this Annual Report.

106

Table of Contents

Inherent Limitations on Effectiveness of Controls

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate. Item 9B: Other Information

None.

107

Table of Contents

PART III Item 10: Directors, Executive Officers and Corporate Governance

Certain information relating to our directors and executive officers, committee information, reports and charters, executive compensation, securityownership of certain beneficial owners and management and related stockholder matters, and certain relationships and related transactions is incorporatedby reference herein from our definitive proxy statement in connection with our Annual Meeting of Shareholders to be held on May 7, 2019. The proxystatement will be filed with the SEC not later than 120 days after the close of the fiscal year. For this purpose, the Compensation Committee Report includedin such proxy statement is specifically not incorporated herein. Also see “Item 1: Business—Our Executive Officers.” Item 11: Executive Compensation

Certain information relating to our directors and executive officers, executive compensation, security ownership of certain beneficial owners andmanagement and related stockholder matters, and certain relationships and related transactions is incorporated by reference herein from our definitive proxystatement in connection with our Annual Meeting of Shareholders to be held on May 7, 2019. The proxy statement will be filed with the SEC not later than120 days after the close of the fiscal year. For this purpose, the Compensation Committee Report included in such proxy statement is specifically notincorporated herein. Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Certain information relating to our directors and executive officers, executive compensation, security ownership of certain beneficial owners andmanagement and related stockholder matters, and certain relationships and related transactions is incorporated by reference herein from our definitive proxystatement in connection with our Annual Meeting of Shareholders to be held May 7, 2019. The proxy statement will be filed with the SEC not later than 120days after the close of the fiscal year. For this purpose, the Compensation Committee Report included in such proxy statement is specifically notincorporated herein. Also see “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Equity CompensationPlans.” Item 13: Certain Relationships and Related Transactions, and Director Independence

Certain information relating to our directors and executive officers, executive compensation, security ownership of certain beneficial owners andmanagement and related stockholder matters, and certain relationships and related transactions is incorporated by reference herein from our definitive proxystatement in connection with our Annual Meeting of Shareholders to be held on May 7, 2019. The proxy statement will be filed with the SEC not later than120 days after the close of the fiscal year. For this purpose, the Compensation Committee Report included in such proxy statement is specifically notincorporated herein. Item 14: Principal Accountant Fees and Services

Certain information relating to audit fees and other of Teradyne’s independent registered public accounting firm is incorporated by reference hereinfrom our definitive proxy statement in connection with our Annual Meeting of Shareholders to be held on May 7, 2019. The proxy statement will be filedwith the SEC not later than 120 days after the close of the fiscal year. For this purpose, the Audit Committee Report included in such proxy statement isspecifically not incorporated herein.

108

Table of Contents

PART IV Item 15: Exhibits and Financial Statement Schedule.

15(a)(1) Financial Statements

The following consolidated financial statements are included in Item 8: Page Report of Independent Registered Public Accounting Firm 44 Consolidated Balance Sheets as of December 31, 2018 and 2017 46 Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016 47 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2018, 2017 and 2016 48 Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2018, 2017 and 2016 49 Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016 50

15(a)(2) Financial Statement Schedule

The following consolidated financial statement schedule is included in Item 15(c):

Schedule II—Valuation and Qualifying Accounts

Schedules other than those listed above have been omitted since they are either not required or information is otherwise included.

15(a)(3) Listing of Exhibits

The Exhibits which are filed with this report or which are incorporated by reference herein are set forth in the Exhibit Index.

15(c) Financial Statement Schedules

109

Table of Contents

TERADYNE, INC.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS Column A Column B Column C Column D Column E Column F

Description Balance at

Beginning of Period

AdditionsCharged to

Cost and Expenses Other Deductions Balance at

End of Period (in thousands) Valuation reserve deducted in the balance sheet from

the asset to which it applies: Accounts receivable: 2018 Allowance for doubtful accounts $ 2,219 $ — $ 20 $ 566 $ 1,673

2017 Allowance for doubtful accounts $ 2,356 $ 4 $ — $ 141 $ 2,219

2016 Allowance for doubtful accounts $ 2,407 $ — $ — $ 51 $ 2,356

Column A Column B Column C Column D Column E Column F

Description Balance at

Beginning of Period

AdditionsCharged to

Cost and Expenses Other Deductions Balance at

End of Period (in thousands) Valuation reserve deducted in the balance sheet from the

asset to which it applies: Inventory: 2018 Inventory reserve $ 102,896 $ 11,242 $ 368 $ 13,727 $ 100,779

2017 Inventory reserve $ 116,016 $ 8,844 $ (126) $ 21,838 $ 102,896

2016 Inventory reserve $ 119,376 $ 17,493 $ 4,417 $ 25,270 $ 116,016

Column A Column B Column C Column D Column E Column F

Description Balance at

Beginning of Period

AdditionsCharged to

Cost and Expenses Other Deductions Balance at

End of Period (in thousands) Valuation reserve deducted in the balance sheet

from the asset to which it applies: Deferred taxes: 2018 Valuation allowance $ 63,919 $ 6,333 $ — $ 400 $ 69,852

2017 Valuation allowance $ 48,369 $ 15,571 $ — $ 21 $ 63,919

2016 Valuation allowance $ 43,039 $ 5,413 $ — $ 83 $ 48,369

Item 16: Form 10-K Summary

Not applicable.

110

Table of Contents

EXHIBIT INDEX

The following designated exhibits are, as indicated below, either filed herewith or have heretofore been filed with the Securities and ExchangeCommission and are referred to and incorporated by reference to such filings. ExhibitNo. Description SEC Document Reference

2.1

Share Sale and Purchase Agreement by and among TeradyneHoldings Denmark ApS, Teradyne Inc. and the shareholders ofUniversal Robots A/S dated May 13, 2015.

Exhibit 2.1 to Teradyne’s Quarterly Report on Form 10-Q for thequarter ended July 5, 2015.

2.2

Share Sale and Purchase Agreement to and among Teradyne RoboticsHoldings Denmark ApS, Teradyne, Inc. and the shareholders ofMobile Industrial Robots ApS dated April 25, 2018.

Exhibit 2.1 to Teradyne’s Quarterly Report on Form 10-Q for thequarter ended April 1, 2018.

3.1 Restated Articles of Organization. Filed herewith.

3.2

Amended and Restated By-laws, as amended.

Exhibit 3.1 to Teradyne’s Quarterly Report on Form 10-Q for thequarter ended September 30, 2007.

4.1

Indenture dated as of December 12, 2016, between Teradyne Inc andWilmington Trust, National Association, as trustee

Exhibit 4.1 to Teradyne’s Current Report on Form 8-K filed onDecember 12, 2016.

10.1†

Standard Manufacturing Agreement entered into as of November 24,2003 by and between Teradyne and Solectron.

Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-Q for thequarter ended September 30, 2007.

10.2†

Amendment 1 to Standard Manufacturing Agreement, dated as ofJanuary 18, 2007, by and between Teradyne and Solectron.

Exhibit 10.2 to Teradyne’s Quarterly Report on Form 10-Q for thequarter ended September 30, 2007.

10.3†

Second Amendment to Standard Manufacturing Agreement, dated asof August 27, 2007, by and between Teradyne and Solectron.

Exhibit 10.3 to Teradyne’s Quarterly Report on Form 10-Q for thequarter ended September 30, 2007.

10.4

Fifth Amendment to Standard Manufacturing Agreement, dated as ofJuly 17, 2009, by and between Teradyne and FlextronicsCorporation.

Exhibit 10.4 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2009.

10.5†

Sixth Amendment to Standard Manufacturing Agreement, dated as ofJuly 27, 2009, by and between Teradyne and FlextronicsCorporation.

Exhibit 10.5 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2009.

10.6

Addendum to Standard Manufacturing Agreement (AuthorizedPurchase Agreement)—Revised July 1, 2010.

Exhibit 10.6 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2010.

10.7

Eighth Amendment to Standard Manufacturing Agreement, dated asof April 13, 2012, by and between Teradyne and FlextronicsSales & Marketing North Asia (L) LTD.

Exhibit 10.7 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2012.

111

Table of Contents

ExhibitNo. Description SEC Document Reference

10.8†

Ninth Amendment to Standard Manufacturing Agreement, dated as ofSeptember 17, 2012, by and between Teradyne and FlextronicsSales & Marketing North Asia (L) LTD.

Exhibit 10.8 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2012.

10.9 2006 Equity and Cash Compensation Incentive Plan, as amended.* Filed herewith.

10.10

Danish Sub-Plan to the 2006 Equity and Cash CompensationIncentive Plan.

Filed herewith.

10.11

Form of Performance-Based Restricted Stock Unit Agreement forExecutive Officers under 2006 Equity and Cash CompensationIncentive Plan.*

Exhibit 10.10 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2017.

10.12

Form of Time-Based Restricted Stock Unit Agreement for ExecutiveOfficers under 2006 Equity and Cash Compensation IncentivePlan.*

Exhibit 10.11 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2017.

10.13

Form of Executive Officer Stock Option Agreement under 2006Equity and Cash Compensation Incentive Plan, as amended.*

Exhibit 10.15 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2017.

10.14

Form of Restricted Stock Unit Agreement for Directors under 2006Equity and Cash Compensation Incentive Plan.*

Exhibit 10.12 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2016.

10.15 1996 Employee Stock Purchase Plan, as amended.* Filed herewith.

10.16

Sub-Plan to the 1996 Employee Stock Purchase Plan for participantslocated in the European Union /European Economic Area.

Exhibit 10.14 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2017.

10.17

Deferral Plan for Non-Employee Directors, as amended.*

Exhibit 10.2 to Teradyne’s Quarterly Report on form 10-Q for thequarter ended September 28, 2008.

10.18

Supplemental Savings Plan, as amended and restated.*

Exhibit 10.18 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2008.

10.19

Supplemental Executive Retirement Plan, as restated.*

Exhibit 10.19 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2008.

10.20

Agreement Regarding Termination Benefits dated January 22, 2014between Teradyne and Mark Jagiela.*

Exhibit 10.24 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2013.

10.21

Employment Agreement dated August 9, 2004 between Teradyne andGregory R. Beecher.*

Exhibit 10.40 to Teradyne’s Quarterly Report on Form 10-Q for thequarter ended July 4, 2004.

10.22

Employment Agreement dated May 7, 2004 between Teradyne andMark Jagiela.*

Exhibit 10.37 to Teradyne’s Quarterly Report on Form 10-Q for thequarter ended July 4, 2004.

112

Table of Contents

ExhibitNo. Description SEC Document Reference

10.23

Amended and Restated Executive Officer Change in ControlAgreement dated December 30, 2008 between Teradyne andGregory R. Beecher, as amended.*

Exhibit 10.28 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2012.

10.24

Executive Officer Change in Control Agreement dated January 22,2014 between Teradyne and Mark Jagiela, as amended.*

Exhibit 10.29 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2013.

10.25

Amended and Restated Executive Officer Change in ControlAgreement dated May 26, 2009 between Teradyne and Charles J.Gray, as amended.*

Exhibit 10.30 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2012.

10.26

Employment Agreement dated July 24, 2009 between Teradyne andCharles J. Gray.*

Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-Q for thequarter ended April 4, 2010.

10.27

Amended and Restated Executive Officer Change in ControlAgreement dated June 30, 2012 between Teradyne and Walter G.Vahey, as amended.*

Exhibit 10.32 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2012.

10.28

Employment Agreement dated February 6, 2013 between Teradyneand Walter G. Vahey.*

Exhibit 10.33 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2012.

10.29

Executive Officer Change in Control Agreement dated September 1,2014 between Teradyne, Inc. and Bradford Robbins.*

Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-Q for thequarter ended September 28, 2014.

10.30

Employment Agreement dated September 1, 2014 between Teradyne,Inc. and Bradford Robbins.*

Exhibit 10.2 to Teradyne’s Quarterly Report on Form 10-Q for thequarter ended September 28, 2014.

10.31

Executive Change in Control Agreement dated February 8, 2016between Teradyne, Inc. and Greg Smith.

Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-Q for thequarter ended April 3, 2016.

10.32

Employment Agreement dated February 8, 2016 between Teradyne,Inc. and Greg Smith.

Exhibit 10.2 to Teradyne’s Quarterly Report on Form 10-Q for thequarter ended April 3, 2016.

10.33

Form of Indemnification Agreement.*

Exhibit 10.24 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2006.

10.34

Nextest Systems Corporation 1998 Equity Incentive Plan, asamended.

Exhibit 10.33 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2008.

10.35

Nextest Systems Corporation 2006 Equity Incentive Plan.

Exhibit 10.34 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2008.

10.36

Eagle Test Systems, Inc. 2003 Stock Option and Grant Plan.

Exhibit 10.35 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2008.

113

Table of Contents

ExhibitNo. Description SEC Document Reference

10.37

Eagle Test Systems, Inc. 2006 Stock Option and Incentive Plan.

Exhibit 10.36 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2008.

10.38

LitePoint Corporation 2002 Stock Plan.

Exhibit 10.43 to Teradyne’s Annual Report on Form 10-K for thefiscal year ended December 31, 2011.

10.39

Credit Agreement among Teradyne, Inc., Barclays Bank PLC, as theadministrative agent and collateral agent, and the lenders partythereto dated April 27, 2015.

Exhibit 10.1 to Teradyne’s Current Report on Form 8-K filed May 1,2015.

10.40

Amendment No. 1 to Credit Agreement dated as of May 19, 2015among Teradyne Inc., Barclays Bank PLC, as the administrativeagent, and the lenders party thereto.

Exhibit 10.2 to Teradyne’s Quarterly Report on Form 10-Q for thequarter ended July 5, 2015.

10.41

Amendment No. 2 to Credit Agreement dated as of March 21, 2018among Teradyne, Inc., Barclays Bank PLC, as the administrativeagent, and the lenders party thereto.

Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-Q for thequarter ended April 1, 2018.

10.42

Letter Agreement, dated December 6, 2016, between Barclays BankPLC and Teradyne, Inc., regarding the Base Warrants.

Exhibit 10.1 to Teradyne’s Current Report on Form 8-K filedDecember 12, 2016.

10.43

Letter Agreement, dated December 6, 2016, between Bank ofAmerica, N.A., and Teradyne, Inc. regarding the Base Warrants.

Exhibit 10.2 to Teradyne’s Current Report on Form 8-K filedDecember 12, 2016.

10.44

Letter Agreement, dated December 6, 2016, between Wells FargoBank, National Association and Teradyne, Inc. regarding the BaseWarrants.

Exhibit 10.3 to Teradyne’s Current Report on Form 8-K filedDecember 12, 2016.

10.45

Letter Agreement, dated December 6, 2016, between Barclays BankPLC and Teradyne, Inc. regarding the Base Call OptionTransaction.

Exhibit 10.4 to Teradyne’s Current Report on Form 8-K filedDecember 12, 2016.

10.46

Letter Agreement, dated December 6, 2016, between Bank ofAmerica, N.A. and Teradyne, Inc. regarding the Base Call OptionTransaction.

Exhibit 10.5 to Teradyne’s Current Report on Form 8-K filedDecember 12, 2016.

10.47

Letter Agreement, dated December 6, 2016, between Wells FargoBank, National Association and Teradyne, Inc. regarding the BaseCall Option Transaction.

Exhibit 10.6 to Teradyne’s Current Report on Form 8-K filedDecember 12, 2016.

10.48

Letter Agreement, dated December 9, 2016, between Barclays BankPLC and Teradyne, Inc., regarding the Additional Warrants

Exhibit 10.7 to Teradyne’s Current Report on Form 8-K filedDecember 12, 2016.

114

Table of Contents

ExhibitNo. Description SEC Document Reference

10.49

Letter Agreement, dated December 9, 2016, between Bank ofAmerica, N.A., and Teradyne, Inc. regarding the AdditionalWarrants.

Exhibit 10.8 to Teradyne’s Current Report on Form 8-K filedDecember 12, 2016.

10.50

Letter Agreement, dated December 9, 2016, between Wells FargoBank, National Association and Teradyne, Inc. regarding theAdditional Warrants.

Exhibit 10.9 to Teradyne’s Current Report on Form 8-K filedDecember 12, 2016.

10.51

Letter Agreement, dated December 9, 2016, between Barclays BankPLC and Teradyne, Inc. regarding the Additional Call OptionTransaction.

Exhibit 10.10 to Teradyne’s Current Report on Form 8-K filedDecember 12, 2016.

10.52

Letter Agreement, dated December 9, 2016, between Bank ofAmerica, N.A. and Teradyne, Inc. regarding the Additional CallOption Transaction

Exhibit 10.11 to Teradyne’s Current Report on Form 8-K filedDecember 12, 2016.

10.53

Letter Agreement, dated December 9, 2016, between Wells FargoBank, National Association and Teradyne, Inc. regarding theAdditional Call Option Transaction.

Exhibit 10.12 to Teradyne’s Current Report on Form 8-K filedDecember 12, 2016.

21.1 Subsidiaries of Teradyne. Filed herewith.

23.1 Consent of PricewaterhouseCoopers LLP. Filed herewith.

31.1 Rule 13a-14(a) Certification of Principal Executive Officer. Filed herewith.

31.2 Rule 13a-14(a) Certification of Principal Financial Officer. Filed herewith.

32.1 Section 1350 Certification of Principal Executive Officer. Furnished herewith.

32.2 Section 1350 Certification of Principal Financial Officer. Furnished herewith.

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document † -Confidential treatment granted.* -Management contract or compensatory plan.

115

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to besigned on its behalf by the undersigned, thereunto duly authorized this 1st day of March, 2019.

TERADYNE, INC.

By: /S/ GREGORY R. BEECHER Gregory R. Beecher,

Vice President, Chief Financial Officer and

Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf ofthe registrant and in the capacities and on the dates indicated.

Signature Title Date

/S/ ROY A. VALLEE Roy A. Vallee

Chair of the Board

March 1, 2019

/S/ MARK E. JAGIELA Mark E. Jagiela

Chief Executive Officer (Principal Executive Officer)and Director

March 1, 2019

/S/ GREGORY R. BEECHER Gregory R. Beecher

Vice President, Chief Financial Officer and Treasurer(Principal Financial and Accounting Officer)

March 1, 2019

/S/ MICHAEL A. BRADLEY Michael A. Bradley

Director

March 1, 2019

/S/ EDWIN J. GILLIS Edwin J. Gillis

Director

March 1, 2019

/S/ TIMOTHY E. GUERTIN Timothy E. Guertin

Director

March 1, 2019

/S/ MERCEDES JOHNSON Mercedes Johnson

Director

March 1, 2019

/S/ MARILYN MATZ Marilyn Matz

Director

March 1, 2019

/S/ PAUL J. TUFANO Paul J. Tufano

Director

March 1, 2019

116

Exhibit 3.1

The Commonwealth of Massachusetts

William Francis GalvinSecretary of the Commonwealth

One Ashburton Place, Boston, Massachusetts 02108-1512

FORM MUST BE TYPED Restated Articles of Organization FORM MUST BE TYPED

(General Laws Chapter I56D, Section 10.07, 950 CMR 113.35)

(1) Exact name of corporation: Teradyne, Inc.

(2) Registered office address: 155 Federal Street, Suite 700, Boston, MA 02110

(number, street, city or town, state, zip code)

(3) Date adopted: November 14, 2018

(month, day, year)

(4) Approved by:

(check appropriate box)

☑ the directors without shareholder approval and shareholder approval was not required;

OR

☐ the board of directors and the shareholders in the manner required by G.L. Chapter 156D and the corporation’s articles of organization.

(5)The following information is required to be included in the articles of organization pursuant to G.L. Chapter 156D, Section 2.02 except that thesupplemental information provided for in Article VIII is not required:*

ARTICLE I

The exact name of the corporation is:Teradyne, Inc.

ARTICLE II

Unless the articles of organization otherwise provide, all corporations formed pursuant to G.L. Chapter 156D have the purpose of engaging in any lawfulbusiness. Please specify if you want a more limited purpose:**

To design, develop, manufacture, assemble, produce, acquire, own, buy, import, sell, export, dispose of and otherwise deal in electronic orelectromechanical products or components, and personal property of every kind and description.

To acquire, buy, own and sell securities (including the securities of this corporation), patents, licenses, trade marks, trade names and all rights ofevery kind thereunder.

To acquire, buy, construct, own, lease, mortgage and sell real estate, buildings or any interests therein necessary or desirable for the purposes ofthe corporation.

To acquire all or any part of the goodwill, rights and property, and to assume the whole or any part of the contracts or liabilities of any firm,association, corporation or person, and to pay for such acquisition in cash, stock or other securities of this corporation or otherwise.

To exercise any of the foregoing purposes of powers through subsidiary or affiliated corporations, and in connection therewith and otherwise tohave all the powers conferred now or in future by the Commonwealth of Massachusetts upon business corporations.

* Changes to Article VIII must be made by filing a statement of change of supplemental Information form.** Professional corporations governed by G.L Chapter 156A and must specify the professional activities of the corporation. P.C.

ARTICLE III

State the total number of shares and par value, * if any, of each class of stock that the corporation is authorized to issue. All corporations must authorizestock. If only one class or series is authorized, it is not necessary to specify any particular designation.

WITHOUT PAR VALUE WITH PAR VALUETYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE

Common 1,000,000,000 $.125

ARTICLE IV

Prior to the issuance of shares of any class or series, the articles of organization must set forth the preferences, limitations and relative rights of that classor series. The articles may also limit the type or specify the minimum amount of consideration for which shares of any class or series may be issued.Please set forth the preferences, limitations and relative rights of each class or series and, if desired, the required type and minimum amount ofconsideration to be received.

None.

ARTICLE V

The restrictions, if any, imposed by the articles or organization upon the transfer of shares of any class or series of stock are:

None.

ARTICLE VI

Other lawful provisions, and if there are no such provisions, this article may be left blank.

Article Six is hereby amended to add the following paragraph:

“No director shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a directornotwithstanding any provision of law imposing such liability; provided, that, to the extent provided by applicable law, this provision shall not eliminateor limit the liability of a director (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not ingood faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section sixty-one or sixty-two of Chapter 156B of theMassachusetts General Laws, or (iv) for any transaction from which the director derived an improper personal benefit. This provision shall not eliminatethe liability of a director for any act or omission occurring prior to the date upon which this provision becomes effective. No amendment to or repeal ofthis provision shall apply to or have any effect upon the liability or alleged liability of any director for or with respect to any acts or omissions of suchdirector occurring prior to such amendment or repeal.”

Note: The preceding six (6) articles are considered to be permanent and may be changed only by filing appropriate articles of amendment.

*G.L. Chapter 156D eliminates the concept of par value, however a corporation may specify par value in Article III. See G.L. Chapter 156D,Section 6.21, and the comments relative thereto.

ARTICLE VII

The effective date of organization of the corporation is the date and time the articles were received for filing if the articles are not rejected within thetime prescribed by law. If a later effective date is desired, specify such date, which may not be later than the 90th day after the articles are received forfiling:

It is hereby certified that these restated articles of organization consolidate all amendments into a single document. If a new amendment authorizes anexchange, or effects a reclassification or cancellation, of issued shares, provisions for implementing that action are set forth in these restated articlesunless contained in the text of the amendment. Specify the number(s) of the article(s) being amended: None.

Signed by:

(signature of authorized individual) ☐ Chairman of the board of directors,

☐ President,

☑ Other officer,

☐ Court-appointed fiduciary,

on this 26th day of November , 2018 .

THE COMMONWEALTH OF MASSACHUSETTS

I hereby certify that, upon examination of this document, duly submitted to me, it appears that the provisions of the General Laws relative tocorporations have been complied with, and I hereby approve said articles; and the filing fee having been paid, said articles are deemed to have been filed

with me on:

November 27, 2018 12:29 PM

WILLIAM FRANCIS GALVIN

Secretary of the Commonwealth

Exhibit 10.9

TERADYNE, INC.

2006 EQUITY AND CASH COMPENSATION INCENTIVE PLAN

(as amended through January 21, 2019) 1. Purpose and Eligibility.

The purpose of this 2006 Equity and Cash Compensation Incentive Plan (the “Plan”) of Teradyne, Inc. is to provide equity ownership andcompensation opportunities in the Company (each an “Award”) to employees, officers, directors, consultants and advisors of the Company and itsSubsidiaries, all of whom are eligible to receive Awards under the Plan. Any person to whom an Award has been granted under the Plan is called a“Participant.” Additional definitions are contained in Section 14(a).

2. Administration.

a. Administration by Committee of Independent Members of the Board of Directors. The Plan will be administered by a committee (the“Committee”) composed solely of members of the Board of Directors of the Company that are “independent,” as defined pursuant to Rule 10A-3(b)(1)of the Securities Exchange Act of 1934, as amended, and as proscribed under Rule 5605(a)(2) of The Nasdaq Stock Market LLC (“Nasdaq”), or anyamendment, supplement or modification thereto; provided, however, that, except with respect to Awards granted to non-employee directors which shallbe granted and administered by the Committee, at any time and on any one or more occasions the Board may itself exercise any of the powers andresponsibilities assigned the Committee under the Plan and when so acting shall have the benefit of all of the provisions of the Plan pertaining to theCommittee’s exercise of its authorities hereunder. The Committee, in its sole discretion, shall have the authority to grant Awards, to adopt, amend andrepeal rules relating to the Plan, to interpret and correct the provisions of the Plan and any Award, and, subject to the limitations of the Plan, to modifyand amend any Award. All decisions by the Committee shall be final and binding on all interested persons. Neither the Company nor any member of theCommittee shall be liable for any action or determination relating to the Plan.

b. Delegation to Executive Officers. To the extent permitted by applicable law, the Committee may delegate to one or more executive officers ofthe Company the power to grant Awards and exercise such other powers under the Plan as the Committee may determine; provided, however, that theCommittee shall fix the maximum number of Awards to be granted and the maximum number of shares issuable to any one Participant pursuant toAwards granted by such executive officer or officers. The Committee may, by a resolution adopted by the Committee, authorize one or more executiveofficers of the Company to do one or both of the following: (i) designate employees of the Company or of any of its subsidiaries to be recipients ofAwards and (ii) determine the number, type and terms of such Awards to be received by such employees, subject to the limitations of the Plan; provided,however, that, in each case, the resolution so authorizing such officer or officers shall specify the maximum number and type of

Awards such officer or officers may so award. The Committee may not authorize an officer to designate himself or herself as a recipient of any suchAwards or to grant Awards to other executive officers of the Company.

3. Stock Available for Awards.

a. Number of Shares. Subject to adjustment under Section 3(c), the aggregate number of shares (the “Authorized Shares”) of the Company’scommon stock, $0.125 par value per share (the “Common Stock”), that may be issued pursuant to the Plan shall be 32,000,000 shares of Common Stock.If any Award expires, is terminated, surrendered, forfeited, expires unexercised, is settled in cash in lieu of Common Stock or is exchanged for otherAwards, in whole or in part, the unissued Common Stock covered by such Award shall again be available for the grant of Awards under the Plan. Sharesof Common Stock delivered to the Company by a Participant to (i) purchase shares upon the exercise of an Award, or (ii) satisfy statutory taxwithholding obligations with respect to any Award shall not be added back to the number of shares available for the future grant of Awards under thePlan. All shares of Common Stock covered by an SAR shall be counted against the number of shares available for the grant of Awards under the Plan;provided, however, that SARs that may be settled only in cash shall not be so counted. Shares of Common Stock repurchased by the Company on theopen market using the proceeds from the exercise of an Award shall not increase the number of shares available for future grants of Awards. Sharesissued under the Plan may consist in whole or in part of authorized but unissued shares. Notwithstanding anything to the contrary in this Plan, theforegoing limitations shall be subject to adjustment under Section 3(c), but only to the extent that such adjustment will not affect the status of any Awardintended to qualify as “performance-based compensation” under Section 162(m) of the Code.

b. Per-Participant Limit. Subject to adjustment under Section 3(c), no Participant may be granted stock-based Awards during any one fiscal yearto purchase more than 2,000,000 shares of Common Stock.

c. Adjustment to Common Stock. In the event of any stock split, stock dividend, extraordinary cash dividend, recapitalization, reorganization,merger, consolidation, combination, exchange of shares, liquidation, spin-off, split-up, or other similar change in capitalization or event, (i) the numberand class of securities available for Awards under the Plan and the per-Participant share limit, (ii) the number and class of securities, vesting scheduleand exercise price per share subject to each outstanding stock-based Award, (iii) the repurchase price per security subject to repurchase, and (iv) theterms of each other outstanding stock-based Award shall be adjusted by the Company (or substituted Awards may be made) to the extent the Committeeshall determine, in good faith, that such an adjustment (or substitution) is appropriate. If Section 11(f)(i) applies for any event, this Section 3(c) shall notbe applicable.

d. Fractional Shares. No fractional shares shall be issued under the Plan and the Participant shall, at the Committee’s discretion, receive eithercash in lieu of such fractional shares or a full share for each fractional share.

2

4. Stock Options.

a. General. The Committee may grant options to purchase Common Stock (each, an “Option”) and determine the terms and conditions of eachOption, including, but not limited to (i) the number of shares subject to such Option or a formula for determining such, (ii) subject to Section 4(e)hereof, the exercise price of the Options and the means of payment for the shares, (iii) the Performance Criteria (as defined in Section 11(d)), if any, andlevel of achievement of such Performance Criteria that shall determine the number of shares or Options granted, issued, retainable and/or vested, (iv) theterms and conditions of the grant, issuance and/or forfeiture of the shares or Options, and (v) such further terms and conditions as may be determinedfrom time to time by the Committee, in each case not inconsistent with this Plan.

b. Incentive Stock Options. An Option that the Committee intends to be an “incentive stock option” as defined in Section 422 of the Code (an“Incentive Stock Option”) shall be granted only to employees of the Company and shall be subject to and shall be construed consistently with therequirements of Section 422 of the Code. The Committee and the Company shall have no liability if an Option or any part thereof that is intended to bean Incentive Stock Option does not qualify as such.

c. Nonstatutory Stock Options. An Option or any part thereof that does not qualify as an Incentive Stock Option is referred to herein as a“Nonstatutory Stock Option.”

d. Dollar Limitation. For so long as the Code shall so provide, Options granted to any employee under the Plan (and any other plans of theCompany) which are intended to constitute Incentive Stock Options shall not constitute Incentive Stock Options to the extent that such Options, in theaggregate, become exercisable for the first time in any one calendar year for shares of Common Stock with an aggregate Fair Market Value (as definedin Section 14 and determined as of the respective date or dates of grant) of more than $100,000 (or such other limit as may be provided by the Code). Tothe extent that any such Incentive Stock Options exceed the $100,000 limitation (or such other limit as may be provided by the Code), such Optionsshall be Nonstatutory Stock Options.

e. Exercise Price. The Committee shall establish the exercise price (or determine the method by which the exercise price shall be established) atthe time each Option is granted and specify the exercise price in the applicable Option agreement, provided, that the exercise price per share specified inthe agreement relating to each Option granted under the Plan shall not be less than the Fair Market Value per share of Common Stock on the date of suchgrant. In the case of an Incentive Stock Option to be granted to an employee owning stock possessing more than ten percent (10%) of the total combinedvoting power of all classes of stock of the Company, the price per share specified in the agreement relating to such Incentive Stock Option shall not beless than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the date of grant (or such other limit as may beprovided by the Code). For purposes of determining stock ownership under this subsection, the rules of Section 424(d) of the

3

Code shall apply. Subject to Section 3(c), an Option may not be amended subsequent to its issuance to reduce the price at which it is exercisable unlesssuch amendment is approved by the Company’s shareholders.

f. Duration of Options. Each Option shall be exercisable at such times and subject to such terms, conditions and expiration as the Committee mayspecify in the applicable Option agreement; provided, that no Option shall be exercisable for a period of time greater than ten (10) years from the date ofgrant of such Option; provided, further, that Incentive Stock Options granted to an employee owning stock possessing more than ten percent (10%) ofthe total combined voting power of all classes of stock of the Company shall be exercisable for a maximum of five (5) years from the date of grant ofsuch Option (or such other limit as may be provided by the Code). For purposes of determining stock ownership under this subsection, the rules ofSection 424(d) of the Code shall apply.

g. Vesting of Options. At the time of the grant of an Option, the Committee shall establish a vesting date or vesting dates with respect to the sharesof Common Stock covered by such Options; provided that all Options, subject to and except as provided in Sections 11(f), 11(j), 11(l) and 13, shall havea minimum vesting period of no less than one (1) year. The Committee may establish vesting dates based upon the passage of time and/or thesatisfaction of Performance Criteria or other conditions as deemed appropriate by the Committee.

h. Exercise of Option. Options may be exercised only by delivery to the Company at its principal office address or to such transfer agent as theCompany shall designate of a written notice of exercise specifying the number of shares as to which such Option is being exercised, signed by theproper person, or by notification of the Company-designated third party commercial provider (the “Third Party Commercial Provider”), in accordancewith the procedures approved by the Company and to which the holder of the Option shall have ongoing access by means of accessing such person’saccount maintained with the Third Party Commercial Provider, together with payment in full as specified in Section 4(i) for the number of shares forwhich the Option is exercised.

i. Payment Upon Exercise. Common Stock purchased upon the exercise of an Option shall be paid for by one or any combination of the followingforms of payment:

(i) in United States dollars in cash or by check payable to order of the Company or by fund transfer from the Option holder’s accountmaintained with the Third Party Commercial Provider;

(ii) at the discretion of the Committee, through delivery of shares of Common Stock having a Fair Market Value equal as of the date of theexercise to the cash exercise price of the Option, provided, that such shares were not acquired by the Participant in the prior six months;

4

(iii) at the discretion of the Committee and consistent with applicable law, through the delivery of an assignment to the Company of asufficient amount of the proceeds from the sale of the Common Stock acquired upon exercise of the Option and an authorization to the Third PartyCommercial Provider to pay that amount to the Company, which sale shall be at the Participant’s direction at the time of exercise; or

(iv) at the discretion of the Committee, by any combination of (i), (ii), or (iii) above.

If the Committee exercises its discretion to permit payment of the exercise price of an Incentive Stock Option by means of the methods set forth inclauses (ii), (iii) or (iv) of the preceding sentence, such discretion shall be exercised in writing in the instrument evidencing the Award of the IncentiveStock Option.

j. Notice to Company of Disqualifying Disposition. By accepting an Incentive Stock Option granted under the Plan, each optionee agrees to notifythe Company in writing immediately after such optionee makes a disqualifying disposition of any stock acquired pursuant to the exercise of theIncentive Stock Options. A “disqualifying disposition” is generally any disposition occurring on or before the later of (a) the date two years followingthe date the Incentive Stock Option was granted or (b) the date one year following the date the Incentive Stock Option was exercised.

k. Issuances of Securities. Except as provided in Section 3(c) or as otherwise expressly provided herein, no issuance by the Company of shares ofstock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respectto, the number or price of shares subject to Options. No adjustments shall be made for dividends paid in cash or in property other than securities of theCompany. A Participant that is the holder of an Option shall not be entitled to receive dividends or dividend equivalents declared and payable prior toexercise of the Option.

5. Stock Appreciation Rights

a. General. A Stock Appreciation Right (a “SAR”) is an Award entitling the holder, upon exercise, to receive an amount in cash or Common Stock,or a combination thereof (such form to be determined by the Committee), determined solely by reference to appreciation, from and after the date ofgrant, in the Fair Market Value of a share of Common Stock. The date as of which such appreciation or other measure is determined shall be the exercisedate of the SAR Award.

b. Grants. SARs may be granted in tandem with, or independently of, Options granted under the Plan.

(1) Tandem Awards. When SARs are expressly granted in tandem with Options: (i) the SARs will be exercisable only at such time or times,and to the extent, that the related Option is exercisable, and will be exercisable in accordance with the procedure required for exercise of therelated Option; (ii) the

5

SARs will terminate and no longer be exercisable upon the termination or exercise of the related Option, except that a SAR granted with respect toless than the full number of shares covered by an Option will not be terminated until and only to the extent that the number of shares as to whichthe related Option has been exercised or has terminated exceeds the number of shares not covered by the SAR; (iii) the Option will terminate andno longer be exercisable upon the exercise of the related SAR; and (iv) the SAR will be transferable only with the related Option.

(2) Independent Stock Appreciation Rights. A SAR not expressly granted in tandem with an Option will become exercisable at such time ortimes, and on such conditions, as the Committee may specify in the SAR Award.

c. Terms and Conditions. The Committee shall determine all terms and conditions of a SAR Award, including, but not limited to (i) the number ofshares subject to such SAR Award or a formula for determining such, (ii) the Performance Criteria, if any, and level of achievement of such PerformanceCriteria that shall determine the number of shares granted, issued, retainable and/or vested or the amount of cash payable, (iii) the terms and conditionson the grant, issuance and/or forfeiture of the shares, and (iv) such further terms and conditions as may be determined from time to time by theCommittee, in each case not inconsistent with this Plan. Subject to Section 3(c), a SAR may not be amended subsequent to its issuance to reduce theprice used to determine the measurement price upon exercise unless such amendment is approved by the Company’s shareholders.A Participant that isthe holder of a SAR Award shall not be entitled to receive dividends or dividend equivalents. The Amendment of all SAR Awards shall be subject toSection 11(n).

d. Vesting of SAR Awards. At the time of the grant of a SAR Award, the Committee shall establish a vesting date or vesting dates with respect tosuch SAR Award, provided that all SAR Awards, subject to and except as provided in Sections 11(f), 11(j), 11(l) and 13, shall have a minimum vestingperiod of no less than one (1) year; and, provided, further, that SARs awarded in tandem with Options shall be subject to the same vesting date orvesting dates established by the Committee pursuant to Section 4(g) for such related Options and shall be exercisable only to the extent that such relatedOption shall then be exercisable. The Committee may establish vesting dates based upon the passage of time and/or the satisfaction of PerformanceCriteria or other conditions as deemed appropriate by the Committee.

6. Restricted Stock.

a. Grants. The Committee may grant Awards entitling recipients to acquire shares of Common Stock, subject to (i) delivery to the Company by theParticipant of cash, a check or other sufficient legal consideration in an amount at least equal to the par value of the shares purchased, (ii) the right of theCompany to repurchase or reacquire all or part of such shares at their issue price or other stated or formula price from the

6

Participant in the event that conditions specified by the Committee in the applicable Award are not satisfied prior to the end of the applicable restrictionperiod or periods established by the Committee for such Award (each, a “Restricted Stock Award”), and (iii) Section 6(b).

b. Terms and Conditions. A Participant that is the holder of a Restricted Stock Award, whether vested or unvested, shall be entitled to enjoy allshareholder rights with respect to the shares of Common Stock underlying such Restricted Stock Award, including the right to vote such shares. Subjectto Section 6(c), the Committee shall determine all terms and conditions of any such Restricted Stock Award, including, but not limited to (i) the numberof shares subject to such Restricted Stock Award or a formula for determining such, (ii) the purchase price of the shares, if any, and the means ofpayment for the shares, (iii) the Performance Criteria, if any, and level of achievement of such Performance Criteria that shall determine the number ofshares granted, issued, retainable and/or vested, (iv) the terms and conditions on the grant, issuance and/or forfeiture of the shares, and (v) such furtherterms and conditions as may be determined from time to time by the Committee, in each case not inconsistent with this Plan. At the Committee’selection, shares of Common Stock issued in respect of a Restricted Stock Award may be (i) held in book entry form subject to the Company’sinstructions until any restrictions relating to the Restricted Stock Award lapses, or (ii) evidenced by a stock certificate that may bear a legend indicatingthat the ownership of the shares of Common Stock represented by such certificate is subject to the restrictions, terms and conditions of this Plan and theRestricted Stock Award. Any stock certificates issued in respect of a Restricted Stock Award shall be registered in the name of the Participant. Allcertificates registered in the name of the Participant shall, unless otherwise determined by the Committee, be deposited by the Participant, together witha stock power endorsed in blank, with the Company (or its designee). After the expiration of the applicable restriction periods, the Company (or suchdesignee) shall deliver the certificates no longer subject to such restrictions to the Participant or, if the Participant has died, to the beneficiary designatedby the Participant, in a manner determined by the Committee, to receive amounts due or exercise rights of the Participant in the event of the Participant’sdeath (the “Designated Beneficiary”). In the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant’sestate.

c. Vesting of Restricted Stock. At the time of the grant of a Restricted Stock Award, the Committee shall establish a vesting date or vesting dateswith respect to the shares of Common Stock covered by such Restricted Stock Award, which vesting dates may be based upon the passage of timeand/or the satisfaction of Performance Criteria or other conditions as deemed appropriate by the Committee; provided, that all Restricted Stock Awards,subject to and except as provided in Sections 11(f), 11(j), 11(l) and 13, shall have a minimum vesting period of no less than one (1) year.

7. Restricted Stock Unit.

a. Grants. The Committee may grant Awards entitling recipients to acquire shares of Common Stock in the future, with the future delivery of theCommon Stock subject to a risk of forfeiture or other restrictions that will lapse upon the satisfaction of one or more specified conditions (each, a“Restricted Stock Unit”).

7

b. Terms and Conditions. Subject to Section 7(c), the Committee shall determine all terms and conditions of any such Restricted Stock Unit,including, but not limited to (i) the number of shares subject to such Restricted Stock Unit or a formula for determining such, (ii) the purchase price ofthe shares, if any, and the means of payment for the shares, (iii) the Performance Criteria, if any, and level of achievement of such Performance Criteriathat shall determine the number of shares granted, issued, retainable and/or vested, (iv) the terms and conditions on the grant, issuance and/or forfeitureof the shares, and (v) such further terms and conditions as may be determined from time to time by the Committee, in each case not inconsistent withthis Plan. A Participant that is the holder of a Restricted Stock Unit Award shall not be entitled to shareholder rights with respect to the Restricted StockUnits, including the right to vote such shares represented by the a Restricted Stock Unit or to receive dividends. Any dividend equivalents awarded withrespect to a Restricted Stock Unit shall be subject to the same restrictions on transferability and forfeiture as the Restricted Stock Units with respect towhich the dividend equivalent is paid. A Restricted Stock Unit may be settled in cash or Common Stock, as determined by the Committee, with theamount of the cash payment based on the Fair Market Value of the shares of Common Stock at the time of vesting. Any such settlements may be subjectto such conditions, restrictions and contingencies as the Committee shall establish.

c. Vesting of Restricted Stock Unit. At the time of the grant of a Restricted Stock Unit, the Committee shall establish a vesting date or vesting dateswith respect to the shares of Common Stock covered by such Restricted Stock Unit, which vesting dates may be based upon the passage of time and/orthe satisfaction of Performance Criteria or other conditions as deemed appropriate by the Committee; provided, that all Awards of Restricted StockUnits, subject to and except as provided in Sections 11(f), 11(j), 11(l) and 13, shall have a minimum vesting period of no less than one (1) year.

8. Phantom Stock.

a. General. The Committee may grant Awards entitling recipients to receive, in cash or shares, the Fair Market Value of shares of Common Stock(“Phantom Stock”) upon the satisfaction of one or more specified conditions.

b. Terms and Conditions. Subject to Section 8(c), the Committee shall determine the terms and conditions of a Phantom Stock Award, including,but not limited to (i) the number of shares subject to or represented by such Phantom Stock Award or a formula for determining such, (ii) the purchaseprice of the shares, if any, and the means of payment for the shares, (iii) the Performance Criteria, if any, and level of achievement of such PerformanceCriteria that shall determine the number of shares granted, issued, retainable and/or vested or the amount of cash payable, (iv) the terms and conditionson the grant, issuance and/or forfeiture of the shares or Phantom Stock Award, and (v) such further terms and conditions as may be determined fromtime to time by the Committee, in each case not inconsistent with this Plan. A Participant may not vote the shares represented by a Phantom StockAward. Any settlements of Phantom Stock Awards may be subject to such conditions, restrictions and contingencies as the Committee shall establish.

8

c. Vesting of Phantom Stock. At the time of the grant of a Phantom Stock Award, the Committee shall establish a vesting date or vesting dates withrespect to such Phantom Stock Award; provided that all Phantom Stock Awards, subject to and except as provided in Sections 11(f), 11(j), 11(l) and 13,shall have a minimum vesting period of no less than one (1) year. The Committee may establish vesting dates based upon the passage of time and/or thesatisfaction of Performance Criteria or other conditions as deemed appropriate by the Committee.

9. Other Stock-Based Awards.

The Committee shall have the right to grant other Awards based upon the Common Stock and having such terms and conditions as the Committeemay determine, including, without limitation, the grant of shares based upon certain conditions and/or Performance Criteria, the grant of securitiesconvertible into Common Stock and the grant of stock units. The Committee shall determine the terms and conditions of any such Awards, including,but not limited to (i) the number of shares subject to such Award or a formula for determining such, (ii) the purchase price of the shares, if any, and themeans of payment for the shares, (iii) the Performance Criteria, if any, and level of achievement of such Performance Criteria that shall determine thenumber of shares granted, issued, retainable and/or vested, (iv) the terms and conditions on the grant, issuance and/or forfeiture of the shares or Award,and (v) such further terms and conditions as may be determined from time to time by the Committee, in each case not inconsistent with this Plan. At thetime of the grant of an Award under this Section 9, the Committee shall establish a vesting date or vesting dates with respect to such Award, whichvesting date may be based upon the passage of time and/or the satisfaction of Performance Criteria or other conditions as deemed appropriate by theCommittee; provided, that all Full Value Awards, subject to and except provided in Sections 11(f), 11(j), 11(l) and 13,granted under this Section 9 shallhave a minimum vesting period of no less than one (1) year.

10. Cash Awards.

a. Grants. The Committee may grant cash awards (each, a “Cash Award”), either alone, in addition to, or in tandem with other Awards grantedunder the Plan.

b. Terms and Conditions. The Committee shall determine the terms and conditions of any such Cash Award. From time to time, the Committeeshall establish administrative rules and procedures governing the administration of Cash Awards.

c. Variable Compensation Awards. A Cash Award that the Committee intends to be a “Variable Compensation Award” subject to Section 162(m)of the Code, provides a variable compensation payment each year to the Company’s executive officers and certain eligible senior employees each yearbased on certain Performance Criteria that may include, among other criteria, overall corporate and/or individual business

9

group’s or division’s performance during the prior fiscal year, as determined by the Committee. Variable Compensation Awards are calculated based ona percentage of the Participant’s base annual salary (“Variable Compensation Factor”) and start at 5% for new Participants. Variable CompensationFactors are reviewed annually and typically do not exceed 100%. A newly hired executive officer or employee, who is approved for eligibility forVariable Compensation Awards, will be eligible to receive a Variable Compensation Award for their first year of employment, pro-rated from the date ofhire. The Committee may rely upon the recommendation of the Company’s senior management in granting Variable Compensation Awards to eligibleParticipants who do not constitute executive officers of the Company, including as to the amount and terms of any such Awards and the satisfaction ofPerformance Criteria. No Participant may be granted Variable Compensation Awards that would result in a payment of more than $3 million during anyone fiscal year.

11. General Provisions Applicable to Awards.

a. Transferability of Awards. Except as the Committee may otherwise determine or provide in an Award, Awards shall not be sold, assigned,transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or thelaws of descent and distribution, and, during the life of the Participant, shall be exercisable only by the Participant, provided, however, that NonstatutoryStock Options may be transferred to a grantor-retained annuity trust or a similar estate-planning vehicle in which the trust is bound by all provisions ofthe Option which are applicable to the Participant. References to a Participant, to the extent relevant in the context, shall include references to authorizedtransferees of such an Option.

b. Documentation. Each Award granted under the Plan, with the exception of Cash Awards, shall be evidenced by a written Award agreement insuch form as the Committee shall from time to time approve. Award agreements shall comply with the terms and conditions of the Plan and may containsuch other provisions not inconsistent with the terms and conditions of the Plan as the Committee shall deem advisable. In the case of an Incentive StockOption, the Award agreement shall contain, or refer to, such provisions relating to exercise and other matters as are required of “incentive stock options”under the Code. Award agreements may be evidenced by an electronic transmission (including an e-mail or reference to a website or other URL) sent tothe Participant through the Company’s normal process for communicating electronically with its employees. As a condition to receiving an Award, theCommittee may require the Participant to affirmatively accept the Award and agree to the terms and conditions set forth in the Award agreement byphysically and/or electronically executing the Award agreement or by otherwise physically and/or electronically acknowledging such acceptance andagreement. With or without such affirmative acceptance, however, the Committee may prescribe conditions (including the exercise or attempted exerciseof any benefit conferred by the Award) under which the proposed Participant may be deemed to have accepted the Award and agreed to the terms andconditions set forth in the Award agreement.

10

c. Committee Discretion. The terms of each type of Award need not be identical, and the Committee need not treat Participants uniformly.

d. Performance Criteria. For purposes of this Plan, the term “Performance Criteria” shall mean any one or more of the following performancecriteria, applied to either the Company as a whole or to a division, business unit or Subsidiary, and measured either annually or cumulatively over aperiod of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case asspecified by the Committee in the Award: cash flow; earnings per share; earnings before interest, taxes and amortization; return on equity; totalshareholder return; share price performance; return on capital; return on assets or net assets; revenue; orders; product gross margins, including bycustomer; income or net income; operating income or net operating income; operating profit or net operating profit; income from operations lessrestructuring and other, net, amortization of acquired intangible assets, acquisition and divestiture related charges or credits, pension actuarial gains andlosses, and other non-recurring gains and charges; operating margin or profit margin; return on operating revenue; return on invested capital; marketsegment share; customer wins or design ins; product release schedules; new product innovation; product cost reduction; brand recognition/acceptance;product ship targets; process improvement results; verification of business strategy and/or business plan; improvement of strategic position; adaptationto changes in the marketplace or environment; or customer satisfaction. If the Award so provides, the Committee may appropriately evaluateachievement against Performance Criteria to take into account any of the following events that occurs during a performance period: asset write-downs;litigation or claim judgments or settlements; the effect of changes in tax law; accounting principles or other such laws or provisions affecting reportedresults; accruals for reorganization and restructuring programs and any extraordinary non-recurring charges or other events. The Committee mayprescribe the foregoing criteria either individually or in combination. The Committee’s determination of the achievement of any Performance Criteriashall be conclusive. At the time of the grant of any Full Value Award subject to this Section 11(d), the Committee shall establish a vesting date or vestingdates with respect to the shares of Common Stock covered by such Awards; provided that all Full Value Awards subject to this Section 11(d), subject toand except as provided in Sections 11(f), 11(j), 11(l) and 13, shall have a minimum vesting period of no less than one (1) year.

e. Termination of Status. Except as otherwise specified herein, the Committee shall determine the effect on an Award of the disability, death,retirement, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period duringwhich, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Awardunder such circumstances, subject to applicable law and the provisions of the Code.

f. Acquisition or Liquidation of the Company.

(i) Consequences of an Acquisition. If the Company is to be consolidated with or acquired by another entity in a merger or other

11

reorganization in which the holders of the outstanding voting stock of the Company immediately preceding the consummation of such event shall,immediately following such event, hold, as a group, less than a majority of the voting securities of the surviving or successor entity, or in the eventof a sale of all or substantially all of the Company’s assets or otherwise (each, an “Acquisition”), the Committee or the board of directors of anyentity assuming the obligations of the Company hereunder (the “Successor Committee”), shall, as to outstanding Awards, either (A) makeappropriate provision for the continuation of such Awards by substituting on an equitable basis for the shares then subject to such Awards either(1) the consideration payable with respect to the outstanding shares of Common Stock in connection with the Acquisition, (2) shares of stock ofthe surviving or successor corporation or (3) such other securities as the Committee or the Successor Committee deems appropriate, the FairMarket Value of which shall not materially exceed the Fair Market Value of the shares of Common Stock subject to such Awards immediatelypreceding the Acquisition; or (B) upon written notice to the Participants, provide that all Awards must be exercised, to the extent then exercisableor to be exercisable as a result of the Acquisition, within a specified number of days of the date of such notice, at the end of which period theAwards shall terminate; or (C) terminate all Awards in exchange for a cash payment equal to the excess, if any, of the Fair Market Value of theshares subject to such Awards (to the extent then exercisable or to be exercisable as a result of the Acquisition) over the exercise price thereof, ifany; or (D) in the case of Awards that may be settled in whole or in part in cash, provide for equitable treatment of such Awards.

(ii) Substitution of Awards Upon Certain Events. In connection with a merger or consolidation of an entity with the Company or theacquisition by the Company of property or stock of an entity, the Committee may grant Awards under the Plan in substitution for stock and stock-based awards issued by such entity or an affiliate thereof. The substitute Awards shall be granted on such terms and conditions as the Committeeconsiders appropriate in the circumstances.

(iii) Liquidation or Dissolution. In the event of the proposed liquidation or dissolution of the Company, each Award, except for Cash Awardsalready earned, to the extent not then exercised or vested, will terminate immediately prior to the consummation of such proposed action or atsuch other time and subject to such other conditions as shall be determined by the Committee.

g. Withholding. Each Participant shall pay to the Company, or make provisions satisfactory to the Company for payment, of any taxes required bylaw to be withheld in connection with Awards to such Participant no later than the date of the event creating the tax withholding obligation. Participantsmay elect to satisfy such tax withholding obligations by authorizing the Company to withhold shares of Common Stock from the Award creating the taxobligation, valued at their Fair Market Value. If the withholding of shares for legal or accounting reasons is problematic and a Participant

12

does not otherwise satisfy such tax withholding obligations, the Company may, to the extent permitted by law, deduct any such tax obligations from anypayment of any kind otherwise due to a Participant.

h. Amendment of Awards. The Committee may amend, modify or terminate any outstanding Award including, but not limited to, substitutingtherefor another Award of the same or a different type, changing the date of exercise or realization, the vesting provisions (subject to the minimumvesting requirements set forth herein), Performance Criteria, or level of achievement of Performance Criteria, and converting an Incentive Stock Optionto a Nonstatutory Stock Option; provided that, except as otherwise provided in Section 11(f)(i), the Participant’s consent to such action shall be requiredunless the Committee determines that the action, taking into account any related action, would not materially and adversely affect the Participant;provided, further, that subject to Section 3(c), an Option may not be amended subsequent to its issuance either to reduce the price at which suchpreviously issued Option is exercisable or to extend the period of time for which such previously-issued Option shall be exercisable beyond ten(10) years unless such amendment is approved by the Company’s shareholders. Furthermore, no Option shall be canceled and replaced with Optionshaving a lower exercise price unless such cancellation and exchange is approved by the Company’s shareholders. The Amendment of all Awards shallbe subject to Section 11(n).

i. Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to removerestrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of theCompany, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have beensatisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, (iii) the Participant hasexecuted and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of anyapplicable laws, rules or regulations, and (iv) the Participant has paid to the Company, or made provisions satisfactory to the Company for payment of,any taxes required by law to be withheld in connection with the Award.

j. Acceleration. The Committee may at any time provide (i) that Awards that may be settled in whole or in part in cash may become immediatelyexercisable in full or in part, and (ii) in connection with the disability or death of a Participant or in connection with an event contemplated bySection 11(f)(i), that any Award shall become exercisable in full or in part or shall be free of some or all restrictions or the risk of forfeiture. TheCommittee may take the actions contemplated by the preceding sentence despite the fact that such actions may (x) cause the application of Sections280G and 4999 of the Code if an event contemplated by Section 11(f)(i) occurs, or (y) disqualify all or part of an Option as an Incentive Stock Option.In the event of the acceleration of the exercisability of one or more outstanding Options, including pursuant to Section 11(f)(i), the Committee mayprovide, as a condition of accelerated exercisability of any or all such Options, that the Common Stock or other substituted consideration, includingcash, as to which exercisability has been accelerated shall be restricted and subject to forfeiture back

13

to the Company at the election of the Company at the cost thereof upon termination of employment or other relationship, with the timing and other termsof the vesting of such restricted Common Stock or other consideration being not less favorable to the Participant than the timing and other terms of thesuperseded vesting schedule of the related Option.

k. Reserved.

l. Exception to Minimum Vesting Periods and Acceleration Limitations. The Committee may grant or accelerate the vesting of Awards with respectto up to 5% of the maximum, aggregate shares of Common Stock authorized for issuance hereunder in a manner that does not comply with the minimumvesting periods set forth in Sections 4(g), 5(d), 6(c), 7(c), 8(c), 9, 11(d) and 13 or that is not otherwise permitted under the vesting accelerationlimitations in Section 11(j).

m. Compliance with Section 409A. Any other provision of the Plan or any Award to the contrary notwithstanding, the Plan and every Awardhereunder shall be construed, administered and enforced as necessary to comply with applicable requirements of Section 409A of the Code and theTreasury and IRS rulings and regulations issued thereunder, so that no Participant shall (without such Participant’s express written consent) incur any ofthe additional tax or interest liabilities of Section 409A(a)(B) of the Code with respect to any Award. The Plan and each Award are hereby modified andlimited as necessary to comply with applicable requirements of Section 409A.

n. Compliance with Limitations on Repricing. Unless such action is approved by the Company’s shareholders, the Company may not, except asprovided for under Section 3(c)(i) amend any outstanding Option or SAR granted under the Plan to provide an exercise or measurement price per sharethat is lower than the then-current exercise or measurement price per share of such outstanding Option or SAR; (ii)cancel any outstanding option orstock appreciation right (whether or not granted under the Plan) and grant in substitution new Awards under the Plan (other than Awards grantedpursuant to Section 11(f)(ii)); (iii) cancel in exchange for a cash payment any outstanding Option or SAR with an exercise or measurement price pershare above the then-current Fair Market Value; or (iv) take any action under the Plan that constitutes a “repricing” of an Award with the meaning of therules of the New York Stock Exchange, or other exchange on which the Company’s Common Stock is traded.

12. Foreign Jurisdictions.

To the extent that the Committee determines that the material terms set by the Committee or imposed by the Plan preclude the achievement of thematerial purposes of the Plan in jurisdictions outside the United States, the Committee will have the authority and discretion to modify those terms andprovide for such other terms and conditions as the Committee determines to be necessary, appropriate or desirable to accommodate differences in locallaw, policy or custom or to facilitate administration of the Plan. The Committee may adopt or approve sub-plans, appendices or supplements to, or

14

amendments, restatements or alternative versions of, the Plan as it may consider necessary, appropriate or desirable for such purpose, without therebyaffecting the terms of the Plan as in effect for any other purpose. The special terms and any appendices, supplements, amendments, restatements oralternative versions, however, shall not include any provisions that are inconsistent with the terms of the Plan as then in effect, unless the Plan couldhave been amended to eliminate such inconsistency without further approval by the shareholders. The Committee shall also have the authority anddiscretion to delegate the foregoing powers to appropriate officers of the Company.

13. Grant of Awards to Non-Employee Directors.

Each person who is a member of the Board of Directors and who is not an employee of the Company (each, a “Non-Employee Director”) shall beautomatically granted Awards having a Fair Market Value or exercisable for shares having a Fair Market Value, as the case may be, on the day of suchgrant as follows:

a. on the date such Non-Employee Director is first elected or appointed to the Board of Directors (other than pursuant to an election at an annualmeeting of shareholders, in which case, paragraph b and only paragraph b below shall apply) equal to the value of the Automatic Annual Grant, asprorated daily to reflect the period between the directors date of election or appointment and the date of the next Automatic Annual Grant; and

b. on the date in each year which is the earlier of (i) the date that the annual meeting of shareholders is held and (ii) the last Thursday in May,equal to a dollar amount approved by the Board of Directors not to exceed $200,000 (“Automatic Annual Grant”).

Awards granted under this Section 13 may be any of the following: Restricted Stock Units, Restricted Stock, Nonstatutory Stock Options, SARs,or cash, or a combination of the foregoing. Awards granted under the Plan shall be in addition to the annual Board and Committee cash retainers paid bythe Company to the Non-Employee Directors. The type of Awards granted under this Section 13 shall be determined, in each instance, at theCommittee’s discretion (subject to the foregoing limitations). The number of shares, if any, covered by Awards granted under this Section 13 shall besubject to adjustment in accordance with the provisions of Section 3(c) of this Plan. Subject to and except as provided in Sections 11(f), 11(j) and 11(l),an Award of Restricted Stock, Restricted Stock Units, Options or SARS granted pursuant to this Section 13 shall have a minimum vesting period thatextends until the earlier of one year from the grant of the Award or the date the next annual meeting of shareholders is held following the grant of theAward, and shall expire on the date which is ten (10) years after the date of grant of such Award. Cash Awards granted pursuant to this Section 13 may,at the Committee’s discretion, be immediately exercisable or paid in their entirety on the date of grant.

15

14. Miscellaneous.

a. Definitions.

(i) “Company” for purposes of eligibility under the Plan, shall include Teradyne, Inc. and any present or future subsidiary corporations ofTeradyne, Inc., as defined in Section 424(f) of the Code (a “Subsidiary”), and any present or future parent corporation of Teradyne, Inc., asdefined in Section 424(e) of the Code. For purposes of Awards other than Incentive Stock Options, the term “Company” shall include any otherentity in which the Company has a direct or indirect significant interest, as determined by the Committee in its sole discretion.

(ii) “Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder.

(iii) “Employee” for purposes of eligibility under the Plan shall include a person to whom an offer of employment has been extended by theCompany and who has actually commenced employment with the Company, whether full or part-time status.

(iv) “Fair Market Value” of the Company’s Common Stock on any date means (i) the closing price (on that date) of the Common Stock onthe principal national securities exchange on which the Common Stock is traded, if the Common Stock is then traded on a national securitiesexchange; or (ii) the average of the closing bid and asked prices last quoted (on that date) by an established quotation service for over-the-countersecurities, if the Common Stock is not then traded on a national securities exchange; or (iii) if the Common Stock is not publicly traded, the fairmarket value of the Common Stock as determined by the Committee after taking into consideration all factors which it deems appropriate,including, without limitation, recent sale and offer prices of the Common Stock in private transactions negotiated at arm’s length; provided, that,in all events the Fair Market Value shall represent the Committee’s good faith determination of the fair market value of the Common Stock. TheCommittee’s determination shall be conclusive as to the Fair Market Value of the Common Stock.

(v) “Full Value Awards” means Restricted Stock, Restricted Stock Units and Awards other than (a) Options or (b) SARs or (c) Cash Awardsor (d) other stock-based Awards for which the Participant pays the intrinsic value (whether directly or by forgoing a right to receive a cashpayment from the Company).

b. Legal Consideration for Issuance of Shares. Unless otherwise determined by the Committee, in the case of Awards of Restricted Stock,Restricted Stock Units, or Awards that are settled in whole or in part with shares of Common Stock, to the extent such Awards do not otherwise requirethe payment by the Participant of cash consideration that exceeds the par value of the shares of Common Stock received in connection therewith, theservices rendered or to be rendered by the Participant shall satisfy the legal requirement of payment of par value for such shares of Common Stock.

16

c. No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award, and the grant of an Award shall notbe construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves theright at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan.

d. No Rights As Shareholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as ashareholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder thereof.

e. Effective Date and Term of Plan. The Plan shall become effective on the date on which it is approved by the shareholders of the Company (the“Effective Date”). No Awards shall be granted under the Plan after May 12, 2025, but Awards previously granted may extend beyond that date.

f. Amendment of Plan. The Committee may amend this Plan at any time, provided that any material amendment to the Plan will not be effectiveunless approved by the Company’s shareholders. For this purpose, a material amendment is any amendment that would (i) other than pursuant toSection 3(c), materially increase either the aggregate number of shares of Common Stock available for issuance under the Plan; or the maximum numberof shares of Common Stock issuable in one fiscal year to a Participant; (ii) expand or limit the class of persons eligible to receive Awards or otherwiseparticipate in the Plan; (iii) subject to Section 3(c), reduce the price at which a previously-issued Option is exercisable or extend the period of time forwhich a previously-issued Option shall be exercisable beyond ten (10) years; (iv) subject to Section 11(f) and Section 11(j), amend the minimum vestingprovisions of Full Value Awards; or (v) require shareholder approval pursuant to the requirements of Nasdaq and/or any other exchange on which theCompany is then listed or pursuant to applicable law.

g. Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws ofThe Commonwealth of Massachusetts, exclusive of reference to rules and principles of conflicts of law.

17

Exhibit 10.10

SUPPLEMENT TO THE RESTRICTED STOCK UNIT SECTION OF THE

TERADYNE, INC.2006 EQUITY AND CASH COMPENSATION INCENTIVE PLAN

(as amended as of January 21, 2019)

DANISH SECTION

Preamble

The purpose of this Supplement (the “Supplement”) to the Teradyne, Inc. 2006 Equity and Cash Compensation Incentive Plan (the “Plan”) and theterms and conditions applicable to restricted stock units (“Restricted Stock Units”) set forth in Section 7 of the Plan (the “Terms”), as amended,modified or restated (the Plan and the Terms as modified by this Supplement in accordance with the terms hereof, the “Danish Subplan”), is to allowTeradyne, Inc. (the “Company”) to grant certain employees and officers of its Danish subsidiaries, (“Teradyne Denmark Subsidiaries”) Restricted StockUnits in a manner that will comply with certain conditions set forth in the Danish Share Option Act (aktieoptionsoloven) as amended on 6 December2018 and effective 1 January 2019 (“Danish Share Option Act”). Capitalized terms used herein but not elsewhere defined shall have the same meaningsas those in the Plan or the Terms. Unless as set forth herein, all of the terms of the Plan and Terms shall apply to grants under this Danish Subplan.

This Danish Subplan was authorized and approved by the Compensation Committee of the Board of Directors on January 21, 2019. The DanishSubplan is a new equity incentive scheme designed to comply with the Danish Share Option Act.

Eligibility

Only employees and officers of Teradyne Denmark Subsidiaries are eligible to receive Awards of Restricted Stock Units under this DanishSubplan.

Effect of Termination of Employment

Restricted Stock Units granted under this Danish Subplan will not vest further after termination of employment, except in limited certaincircumstances as follows: If the recipient’s employment with Teradyne Denmark Subsidiaries ends on account of permanent disability or death, theunvested portion of an Award which would have vested if the employee had continued employment through the relevant vesting period shallautomatically become vested in full on the date of his or her termination of employment on account of permanent disability or death.

In all other circumstances, any unvested portion of Restricted Stock Units will be forfeited as of the date of termination of employment. Therecipient’s employment will be considered terminated as of the date the recipient is no longer actively providing services to Teradyne DenmarkSubsidiaries regardless of the reason for such termination or the terms of the recipient’s employment agreement, if any. The recipient’s right to vest inthe RSUs under this Danish Subplan, if any, will terminate as of such date and will not be extended by any notice period (e.g., the recipient’s period ofservice would not include any contractual notice period or any period of “garden leave” or similar period mandated under Danish employment laws orthe terms of the recipient’s employment agreement, if any). The Committee shall have the exclusive discretion to determine when the recipient is nolonger actively providing services for purposes of an Award (including whether the recipient may still be considered to be providing services while on aleave of absence).

A recipient’s employment shall be considered as continuing uninterrupted during any bona fide leave of absence (such as those attributable toillness or military obligations) provided that the period of such leave does not exceed 90 days or, in the case of an employee, if longer, any period duringwhich the employee’s right to reemployment is guaranteed by Danish law. A bona fide leave of absence with the written approval of the Committee shallnot be considered an interruption of employment, provided that such written approval contractually obligates Teradyne Denmark Subsidiaries tocontinue the employment of the recipient after the approved period of absence.

1

Exhibit 10.15

TERADYNE, INC.

1996 EMPLOYEE STOCK PURCHASE PLAN

(as amended, effective January 1, 2019)

Article 1—Purpose.

This 1996 Employee Stock Purchase Plan (the “Plan”) is intended to encourage stock ownership by all eligible employees of Teradyne, Inc. (the“Company”), a Massachusetts corporation, and its participating subsidiaries (as defined in Article 17) so that they may share in the growth of theCompany by acquiring or increasing their proprietary interest in the Company. The Plan is designed to encourage eligible employees to remain in theemploy of the Company and its participating subsidiaries. The Plan is intended to constitute an “employee stock purchase plan” within the meaning ofSection 423(b) of the Internal Revenue Code of 1986, as amended (the “Code”).

Article 2—Administration of the Plan.

The Plan may be administered by a committee appointed by the Board of Directors of the Company (the “Committee”). The Committee shallconsist of not less than two members of the Company’s Board of Directors. The Board of Directors may from time to time remove members from, oradd members to, the Committee. Vacancies on the Committee, howsoever caused, shall be filled by the Board of Directors. The Committee may selectone of its members as Chairman, and shall hold meetings at such times and places as it may determine. Acts by a majority of the Committee, or actsreduced to or approved in writing by a majority of the members of the Committee, shall be the valid acts of the Committee.

The interpretation and construction by the Committee of any provisions of the Plan or of any option granted under it shall be final, unlessotherwise determined by the Board of Directors. The Committee may from time to time adopt such rules and regulations for carrying out the Plan as itmay deem best, provided that any such rules and regulations shall be applied on a uniform basis to all similarly situated employees under the Plan. Nomember of the Board of Directors or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or anyoption granted under it.

In the event the Board of Directors fails to appoint or refrains from appointing a Committee, the Board of Directors shall have all power andauthority to administer the Plan. In such event, the word “Committee” wherever used herein shall be deemed to mean the Board of Directors.

Article 3—Eligible Employees.

No option may be granted to any person serving as a member of the Committee at the time of grant. Subject to the foregoing limitation, allemployees of the Company or any of its participating subsidiaries who are employees of the Company or any of its

participating subsidiaries on or before the first day of any Payment Period (as defined in Article 5), and whose customary employment is not less thantwenty hours per week and more than five months in any calendar year shall be eligible to receive options under the Plan to purchase common stock ofthe Company, par value $.125 per share (“Common Stock”); provided, however, that the Committee retains the discretion to determine which eligibleemployees may participate in an offering pursuant to and consistent with Treasury Regulation Sections 1.423.2(e) and (f).. All eligible employees shallhave the same rights and privileges hereunder, except as permitted or required under Treasury Regulation 1.423-2(f) and Article 17 hereof. Persons whoelect to enter the Plan in accordance with Article 7 and who are eligible employees on the first business day of any Payment Period (as defined in Article5) shall receive their options as of such day. Persons who elect to enter the Plan in accordance with Article 7 and who become eligible employees afterany date on which options are granted under the Plan shall be granted options on the first business day of the next succeeding Payment Period on whichoptions are granted to eligible employees under the Plan. In no event, however, may an employee be granted an option if such employee, immediatelyafter the option was granted, would be treated as owning stock possessing five percent or more of the total combined voting power or value of all classesof stock of the Company or of any parent corporation or subsidiary corporation, as the terms “parent corporation” and “subsidiary corporation” aredefined in Section 424(e) and (f) of the Code. For purposes of determining stock ownership under this paragraph, the rules of Section 424(d) of the Codeshall apply, and stock which the employee may purchase under outstanding options shall be treated as stock owned by the employee.

Article 4—Stock Subject to the Plan.

The stock subject to the options under the Plan shall be authorized but unissued Common Stock, or shares of Common Stock reacquired by theCompany, including shares purchased in the open market. The aggregate number of shares which may be issued pursuant to the Plan is 30,400,000,subject to adjustment as provided in Article 12. If any option granted under the Plan shall expire or terminate for any reason without having beenexercised in full or shall cease for any reason to be exercisable in whole or in part, the unpurchased shares subject thereto shall again be available underthe Plan.

Article 5—Payment Periods and Stock Options.

For the duration of the Plan, a Payment Period shall be defined as each six-month period commencing on the first day of January and ending onthe last day of June and commencing on the first day of July and ending on the last day of December of each calendar year.

On the first business day of each Payment Period, the Company will grant to each eligible employee who is then a participant in the Plan an optionto purchase on the last day of such Payment Period, at the Option Price hereinafter provided for, a maximum number of 3,000 shares on condition thatsuch employee remains eligible to participate in the Plan throughout the remainder of such Payment Period. The participant shall be entitled to exercisethe option so granted only to the extent of the participant’s

2

accumulated payroll deductions on the last day of such Payment Period. If the participant’s accumulated payroll deductions on the last day of thePayment Period would enable the participant to purchase more than 3,000 shares except for the 3,000 share limitation, the excess of the amount of theaccumulated payroll deductions over the aggregate purchase price of the 3,000 shares shall be promptly refunded to the participant by the Company,without interest. The Option Price per share for each Payment Period shall be 85% of the fair market value of the Common Stock on the last businessday of the Payment Period rounded up to the nearest cent. The foregoing limitation on the number of shares subject to option and the Option Price shallbe subject to adjustment as provided in Article 12.

For purposes of the Plan, the term “fair market value” on any date means (i) the closing price (on that date) of the Common Stock on the principalnational securities exchange on which the Common Stock is traded, if the Common Stock is then traded on a national securities exchange; or (ii) theaverage of the closing bid and asked prices last quoted (on that date) by an established quotation service for over-the-counter securities, if the CommonStock is not reported on a national securities exchange; or (iii) if the Common Stock is not publicly traded, the fair market value of the Common Stockas determined by the Committee after taking into consideration all factors which it deems appropriate, including, without limitation, recent sale and offerprices of the Common Stock in private transactions negotiated at arm’s length.

For purposes of the Plan, the term “business day” means a day on which there is trading on The Nasdaq Stock Market or the aforementionednational securities exchange, whichever is applicable pursuant to the preceding paragraph; and if neither is applicable, a day that is not a Saturday,Sunday or legal holiday in Massachusetts.

Notwithstanding any other provision herein, no employee shall be granted an option which permits the employee’s right to purchase stock underthe Plan, and under all other Section 423(b) employee stock purchase plans of the Company and any parent or subsidiary corporations, to accrue at a ratewhich exceeds $25,000 of fair market value of such stock (determined on the date or dates that options on such stock were granted) for each calendaryear in which such option is outstanding at any time. The purpose of the limitation in the preceding sentence is to comply with Section 423(b)(8) of theCode. If the participant’s accumulated payroll deductions on the last day of the Payment Period would otherwise enable the participant to purchaseCommon Stock in excess of the Section 423(b)(8) $25,000 limitation described in this paragraph, the excess of the amount of the accumulated payrolldeductions over the aggregate purchase price of the shares actually purchased shall be promptly refunded to the participant by the Company, withoutinterest.

Article 6—Exercise of Option.

Each eligible employee who continues to be a participant in the Plan on the last day of a Payment Period shall be deemed to have exercised his orher option on such date and shall be deemed to have purchased from the Company such number of full shares of Common Stock reserved for thepurpose of the Plan as the participant’s accumulated

3

payroll deductions on such date will pay for at the Option Price, subject to the 3,000 share limit of the option and the Section 423(b)(8) $25,000limitation described in Article 5. If the individual is not a participant on the last day of a Payment Period, then he or she shall not be entitled to exercisehis or her option. Only full shares of Common Stock may be purchased under the Plan. Unused payroll deductions remaining in a participant’s accountat the end of a Payment Period solely by reason of the inability to purchase a fractional share (and for no other reason) shall be refunded.

Article 7—Authorization for Entering the Plan.

An employee may elect to enter the Plan by filling out, signing and delivering to the Company an authorization:

A. Stating the percentage to be deducted from the employee’s pay;

B. Authorizing the purchase of stock for the employee in each Payment Period in accordance with the terms of the Plan; and

C. Specifying the exact name or names in which stock purchased for the employee is to be issued as provided under Article 11 hereof.

Such authorization must be received by the Company on or before the first day of the next succeeding Payment Period.

Unless a participant files a new authorization or withdraws from the Plan, the deductions and purchases under the authorization the participant hason file under the Plan will continue from one Payment Period to succeeding Payment Periods as long as the Plan remains in effect.

The Company will accumulate and hold for each participant’s account the amounts deducted from his or her pay. No interest will be paid on theseamounts.

Article 8—Maximum Amount of Payroll Deductions.

An employee may authorize payroll deductions in an amount (expressed as a whole percentage) not less than two percent (2%) but not more thanten percent (10%) of the employee’s cash compensation.

Article 9—Change in Payroll Deductions.

Deductions may not be increased during a Payment Period. Deductions may be decreased during a Payment Period, provided that an employeemay not decrease his deduction more than once during any Payment Period.

4

Article 10—Withdrawal from the Plan.

A participant may withdraw from the Plan (in whole but not in part) at any time prior to the last day of a Payment Period by delivering awithdrawal notice to the Company.

To re-enter the Plan, an employee who has previously withdrawn must file a new authorization on or before the first day of the next PaymentPeriod in which he or she wishes to participate. The employee’s re-entry into the Plan becomes effective at the beginning of such Payment Period,provided that he or she is an eligible employee on the first business day of the Payment Period.

Article 11—Issuance of Stock.

Stock issued to participants shall be delivered as soon as practicable after each Payment Period by the Company’s transfer agent.

Stock purchased under the Plan shall be issued only in the name of the participant, or if the participant’s authorization so specifies, in the name ofthe participant and another person of legal age as joint tenants with rights of survivorship.

Article 12—Adjustments.

Upon the happening of any of the following described events, a participant’s rights under options granted under the Plan shall be adjusted ashereinafter provided:

A. In the event that the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if, upon areorganization, split-up, liquidation, recapitalization or the like of the Company, the shares of Common Stock shall be exchanged for othersecurities of the Company, each participant shall be entitled, subject to the conditions herein stated, to purchase such number of shares ofCommon Stock or amount of other securities of the Company as were exchangeable for the number of shares of Common Stock that suchparticipant would have been entitled to purchase except for such action, and appropriate adjustments shall be made in the purchase price per shareto reflect such subdivision, combination or exchange; and

B. In the event the Company shall issue any of its shares as a stock dividend upon or with respect to the shares of stock of the class whichshall at the time be subject to options hereunder, each participant upon exercising such an option shall be entitled to receive (for the purchase pricepaid upon such exercise) the shares as to which the participant is exercising his or her option and, in addition thereto (at no additional cost), suchnumber of shares of the class or classes in which such stock dividend or dividends were declared or paid, and such amount of cash in lieu offractional shares, as is equal to the number of shares thereof and the amount of cash in lieu of fractional shares, respectively, which the participantwould have received if the participant had been the holder of the shares as to which the participant is exercising his or her option at all timesbetween the date of the granting of such option and the date of its exercise.

5

Upon the happening of any of the foregoing events, the class and aggregate number of shares set forth in Article 4 hereof which are subject tooptions which have been or may be granted under the Plan and the limitations set forth in the second paragraph of Article 5 shall also be appropriatelyadjusted to reflect the events specified in paragraphs A and B above. Notwithstanding the foregoing, any adjustments made pursuant to paragraphs A orB shall be made only after the Committee, based on advice of counsel for the Company, determines whether such adjustments would constitute a“modification” (as that term is defined in Section 424 of the Code). If the Committee determines that such adjustments would constitute a modification,it may refrain from making such adjustments.

If the Company is to be consolidated with or acquired by another entity in a merger, a sale of all or substantially all of the Company’s assets orotherwise (an “Acquisition”), the Committee or the board of directors of any entity assuming the obligations of the Company hereunder (the “SuccessorBoard”) shall, with respect to options then outstanding under the Plan, either (i) make appropriate provision for the continuation of such options byarranging for the substitution on an equitable basis for the shares then subject to such options either (a) the consideration payable with respect to theoutstanding shares of the Common Stock in connection with the Acquisition, (b) shares of stock of the successor corporation, or a parent or subsidiary ofsuch corporation, or (c) such other securities as the Successor Board deems appropriate, the fair market value of which shall not exceed the fair marketvalue of the shares of Common Stock subject to such options immediately preceding the Acquisition; or (ii) terminate each participant’s options inexchange for a cash payment equal to the excess of the fair market value on the date of the Acquisition of the number of shares of Common Stock thatthe participant’s accumulated payroll deductions as of the date of the Acquisition could purchase, at an option price determined with reference only tothe first business day of the applicable Payment Period and subject to the 3,000 share limit, Code Section 423(b)(8) and fractional-share limitations onthe amount of stock a participant would be entitled to purchase over the aggregate option price to such participant thereof.

The Committee or Successor Board shall determine the adjustments to be made under this Article 12, and its determination shall be conclusive.

Article 13—No Transfer or Assignment of Employee’s Rights.

An option granted under the Plan may not be transferred or assigned, otherwise than by will or by the laws of descent and distribution. Any optiongranted under the Plan may be exercised, during the participant’s lifetime, only by the participant.

Article 14—Termination of Employee’s Rights.

Whenever a participant ceases to be an eligible employee because of retirement, voluntary or involuntary termination, resignation, layoff,discharge, death or for any other

6

reason, his or her rights under the Plan shall immediately terminate, and the Company shall promptly refund, without interest, the entire balance of his orher payroll deduction account under the Plan; provided, however, that if an employee is laid off during the last three months of any Payment Period, heshall nevertheless be deemed to be a participant in the Plan on the last day of the Payment Period. Notwithstanding the foregoing, eligible employmentshall be treated as continuing intact while a participant is on military leave, sick leave or other bona fide leave of absence, for up to 90 days, or, if suchleave is longer than 90 days, for so long as the participant’s right to re-employment is guaranteed either by statute or by written contract.Notwithstanding any other provision herein, if a participant’s employment is terminated by reason of retirement, and the date of such termination occursafter the date that is 3 months prior to the last day of the Payment Period, such participant’s rights under the Plan are not immediately terminated, and ifthe participant has not withdrawn from the Plan, such participant’s options shall be deemed to have been exercised on the last day of the Payment Periodin accordance with the terms of the Plan.

Article 15—Termination and Amendments to Plan.

The Plan may be terminated at any time by the Company’s Board of Directors but such termination shall not affect options then outstanding underthe Plan. If at any time shares of stock reserved for the purpose of the Plan remain available for purchase but not in sufficient number to satisfy all thenunfilled purchase requirements, the available shares shall be apportioned among participants in proportion to the amount of payroll deductionsaccumulated on behalf of each participant that would otherwise be used to purchase stock, and the Plan shall terminate. Upon such termination or anyother termination of the Plan, all payroll deductions not used to purchase stock will be refunded, without interest.

The Committee or the Board of Directors may from time to time adopt amendments to the Plan provided that, without the approval of theshareholders of the Company, no amendment may (i) increase the number of shares that may be issued under the Plan; (ii) change the class of employeeseligible to receive options under the Plan, if such action would be treated as the adoption of a new plan for purposes of Code Section 423(b) and theregulations thereunder; (iii) cause Rule 16b-3 under the Securities Exchange Act of 1934 to become inapplicable to the Plan or (iv) materially revise thePlan pursuant to the rules and regulations of The Nasdaq Stock Market LLC.

Article 16—Limits on Sale of Stock Purchased under the Plan.

The Plan is intended to provide shares of Common Stock for investment and not for resale. The Company does not, however, intend to restrict orinfluence any employee in the conduct of his or her own affairs. An employee may, therefore, sell stock purchased under the Plan at any time theemployee chooses, subject to compliance with any applicable federal or state securities laws and subject to any restrictions imposed under Article 21 toensure that tax withholding obligations are satisfied. THE EMPLOYEE ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THEPRICE OF THE STOCK.

7

Article 17—Participating Subsidiaries.

The term “participating subsidiary” shall mean any present or future subsidiary of the Company, as that term is defined in Section 424(f) of theCode, that is designated from time to time by the Board of Directors to participate in the Plan. The Board of Directors shall have the power to make suchdesignation before or after the Plan is approved by the shareholders. The Board may from time to time establish one or more sub-plans under the Planwith respect to one or more participating subsidiaries, provided that such sub-plan complies with Section 423 of the Code and related TreasuryRegulations.

The Company may, in order to comply with the laws of a foreign jurisdiction, grant options to employees of the Company or a participatingsubsidiary who are citizens or residents of such foreign jurisdiction (without regard to whether they are also citizens of the United States or residentaliens within the meaning of Section 7701(b)(1)(A) of the Code) with terms that are less favorable (but not more favorable) than the terms of optionsgranted under the Plan to employees of the Company or a participating subsidiary who are resident in the United States. Notwithstanding the precedingprovisions of the Plan, employees of the Company or a participating subsidiary who are citizens or residents of a foreign jurisdiction (without regard towhether they are also citizens of the United States or resident aliens within the meaning of Section 77091(b)(1)(A) of the Code) may be excluded fromeligibility under the Plan if (a) the grant of an option under the Plan to a citizen or resident of the foreign jurisdiction is prohibited under the laws of suchjurisdiction or (b) compliance with the laws of the foreign jurisdiction would cause the Plan to violate the requirements of Section 423 of the Code. TheCompany may add one or more appendices to this Plan describing the operation of the Plan in those foreign jurisdictions in which employees areexcluded from participation or granted less favorable options.

Article 18—Optionees Not Shareholders.

Neither the granting of an option to an employee nor the deductions from his or her pay shall constitute such employee a stockholder of the sharescovered by an option until such shares have been actually purchased by the employee.

Article 19—Application of Funds.

The proceeds received by the Company from the sale of Common Stock pursuant to options granted under the Plan will be used for generalcorporate purposes.

Article 20—Notice to Company of Disqualifying Disposition.

By electing to participate in the Plan, each participant agrees to notify the Company in writing immediately after the participant transfers CommonStock acquired under the Plan, if such transfer occurs within two years after the first business day of the Payment Period in which such Common Stockwas acquired. Each participant further agrees to provide any information about such a transfer as may be requested by the Company or any subsidiarycorporation in order to assist it in complying with the tax

8

laws. Such dispositions generally are treated as “disqualifying dispositions” under Sections 421 and 424 of the Code, which have certain taxconsequences to participants and to the Company and its participating subsidiaries.

Article 21—Withholding of Additional Income Taxes.

By electing to participate in the Plan, each participant acknowledges that the Company and its participating subsidiaries are required to withholdtaxes with respect to the amounts deducted from the participant’s compensation and accumulated for the benefit of the participant under the Plan, andeach participant agrees that the Company and its participating subsidiaries may deduct additional amounts from the participant’s compensation, whenamounts are added to the participant’s account, used to purchase Common Stock or refunded, in order to satisfy such withholding obligations. Eachparticipant further acknowledges that when Common Stock is purchased under the Plan the Company and its participating subsidiaries may be requiredto withhold taxes with respect to all or a portion of the difference between the fair market value of the Common Stock purchased and its purchase price,and each participant agrees that such taxes may be withheld from compensation otherwise payable to such participant. It is intended that tax withholdingwill be accomplished in such a manner that the full amount of payroll deductions elected by the participant under Article 7 will be used to purchaseCommon Stock. However, if amounts sufficient to satisfy applicable tax withholding obligations have not been withheld from compensation otherwisepayable to any participant, then, notwithstanding any other provision of the Plan, the Company may withhold such taxes from the participant’saccumulated payroll deductions and apply the net amount to the purchase of Common Stock, unless the participant pays to the Company, prior to theexercise date, an amount sufficient to satisfy such withholding obligations. Each participant further acknowledges that the Company and its participatingsubsidiaries may be required to withhold taxes in connection with the disposition of stock acquired under the Plan and agrees that the Company or anyparticipating subsidiary may take whatever action it considers appropriate to satisfy such withholding requirements, including deducting fromcompensation otherwise payable to such participant an amount sufficient to satisfy such withholding requirements or conditioning any disposition ofCommon Stock by the participant upon the payment to the Company or such subsidiary of an amount sufficient to satisfy such withholdingrequirements.

Article 22—Governmental Regulations.

The Company’s obligation to sell and deliver shares of Common Stock under the Plan is subject to the approval of any governmental authorityrequired in connection with the authorization, issuance or sale of such shares.

Government regulations may impose reporting or other obligations on the Company with respect to the Plan. For example, the Company may berequired to identify shares of Common Stock issued under the Plan on its stock ownership records and send tax information statements to employees andformer employees who transfer title to such shares.

9

Article 23—Governing Law.

The validity and construction of the Plan shall be governed by the laws of Massachusetts, without giving effect to the principles of conflicts of lawthereof.

Article 24—Approval of Board of Directors and Stockholders of the Company.

The Plan was originally adopted by the Board of Directors on March 19, 1996 and subsequently approved by the shareholders. The Plan was mostrecently approved by shareholders on May 21, 2013 and amended by the Committee effective January 1, 2019.

10

Exhibit 21.1

Present Subsidiaries Entity Name:

State or Jurisdiction OfIncorporation

Percentage of VotingSecurities Owned

Teradyne (Asia) Pte., Ltd. Singapore 100%* Teradyne Canada Limited Canada 100% Teradyne de Costa Rica S.A. Costa Rica 100% Teradyne GmbH Germany 100%* Teradyne Holdings Denmark ApS Denmark 100%* Teradyne (India) Engineering Private Ltd. India 100%* Teradyne International Holdings B.V. The Netherlands 100% Teradyne International UK Holdings Ltd. United Kingdom 100%* Teradyne Italia SrL Italy 100%* Teradyne K.K. Japan 100% Teradyne Korea Ltd. Korea 100% Teradyne Limited United Kingdom 100%* Teradyne Malaysia Sdn. Bhd. Malaysia 99%* Teradyne Philippines Limited Delaware 100% Teradyne Robotics Holdings Denmark ApS Denmark 100%* Teradyne SAS France 100% Teradyne (Shanghai) Co., Ltd. People’s Republic of China 100%* Teradyne Taiwan LLC Delaware 100% Teradyne Thailand Ltd. Delaware 100% Energid Technologies Corporation Florida 100% GenRad, LLC Delaware 100% Herco Technology Corp. California 100% P.L.S.T., Inc. (f/k/a Perception Laminates, Inc.) California 100% Eagle Test Systems, Inc. Delaware 100% Eagle Test Systems (Philippines) LLC Delaware 100%* Nextest Systems Corporation Delaware 100% Nextest Systems (Philippines) Corp. Philippines 99.9%* Lemsys SA Switzerland 100%* LitePoint Corporation Delaware 100% LitePoint Europe A/S Denmark 100%* LitePoint Technology Limited Hong Kong 100%* LitePoint Technology (Shanghai) Company Ltd. People’s Republic of China 100%* LitePoint Japan K.K. Japan 100%* LitePoint Design Test, LLC New Mexico 100%* LitePoint Vietnam Limited Socialist Republic of Vietnam 100%* Mobile Industrial Robots ApS Denmark 100%* Mobile Industrial Robots, Inc. Delaware 100%* Mobile Industrial Robots GmbH Germany 100%* Mobile Industrial Robots Pte. Ltd. Singapore 100%* MiR Robots S.L. Spain 100%* MiR Robots (Shanghai) Co. Ltd. People’s Republic of China 100%* Universal Robots A/S Denmark 100%* Universal Robots (Spain) S.L. Spain 100%* Universal Robots (Singapore) Pte. Ltd. Singapore 100%* Universal Robots (India) Pte. Ltd. India 100%* Universal Robots (Shanghai) Co. Ltd. People’s Republic of China 100%* Universal Robots (USA), Inc. Delaware 100%* Universal Robots GmbH Germany 100%* Universal Robots Mexico S.A. de C.V. Mexico 100%* Universal Science and Technology (Shanghai) Co. Ltd. People’s Republic of China 100%* * Indirect subsidiaries whose voting securities are 100% controlled by Teradyne, Inc.

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-188824; 333-177246; 333-159723;333-155564; 333-149017; 333-143231; 333-134519; 333-116632; 333-101983; 333-68074; 333-56373; 333-32547; and 333-07177) of Teradyne, Inc.of our report dated March 1, 2019 relating to the consolidated financial statements and financial statement schedule and the effectiveness of internalcontrol over financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP

Boston, MassachusettsMarch 1, 2019

EXHIBIT 31.1

CERTIFICATIONS

I, Mark E. Jagiela, certify that:

1. I have reviewed this annual report on Form 10-K of Teradyne, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.

Date: March 1, 2019 By: /S/ MARK E. JAGIELA

Mark E. Jagiela Chief Executive Officer

EXHIBIT 31.2

I, Gregory R. Beecher, certify that:

1. I have reviewed this annual report on Form 10-K of Teradyne, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.

Date: March 1, 2019 By: /S/ GREGORY R. BEECHER

Gregory R. Beecher Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO18 U.S.C SECTION 1350,

AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Teradyne, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2018 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Mark E. Jagiela, Chief Executive Officer of the Company, certify pursuant to18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.

/S/ MARK E. JAGIELA

Mark E. JagielaChief Executive Officer

March 1, 2019

EXHIBIT 32.2

CERTIFICATION PURSUANT TO18 U.S.C SECTION 1350,

AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Teradyne, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2018 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Gregory R. Beecher, Chief Financial Officer of the Company, certify pursuantto 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.

/S/ GREGORY R. BEECHER

Gregory R. BeecherChief Financial Officer

March 1, 2019