Teradyne TER · USD

Included in Corporate and Eliminations are interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, acquired intangible amortization, gain on the sale of a business, retirement plan gains (losses), legal and environmental fees, acquisition and divestiture related expenses, contract termination settlement charge, and an expense for the modification of outstanding equity awards.

V. SEGMENT, GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATION As of December 31, 2024, Teradyne had two reportable segments (Semiconductor Test and Robotics) and four operating segments (Semiconductor Test, System Test, Wireless Test, and Robotics). Effective March 2025, Teradyne's Chief Operating Decision Maker (“CODM”) (Teradyne's Chief Executive Officer) placed Regan Mills as President, Product Test, which as of that date included Production Board Test, Defense/Aerospace, and Wireless Test. As noted in Note D: “Acquisitions” and based on the underlying business activities and established reporting structure, upon acquisition, PIC Testing was aggregated into Product Test. As a result, Teradyne has three reportable segments (Semiconductor Test, Robotics, and Product Test). As of December 31, 2025, each of Teradyne's reportable segments represents an individual operating segment. All prior period disclosures have been recast to conform to the current segment structure and presentation requirements.The Semiconductor Test segment includes operations related to the design, manufacturing and marketing of semiconductor test products and services inclusive of storage and system level test products. The Robotics segment includes operations related to the design, manufacturing and marketing of collaborative robotic arms and autonomous mobile robots. The Product Test segment includes operations related to the design, manufacturing and marketing of products and services for defense/aerospace test, circuit-board test, wireless test systems, and silicon photonics testing. Each reportable segment has a segment manager who is accountable to and maintains regular contact with Teradyne’s CODM to discuss operating activities, financial results, forecasts, and plans for the segment.The CODM uses business segment income (loss) before income taxes predominantly in the annual budgeting and forecasting process. The CODM also uses this measure when making decisions about the allocation of operating and capital resources to each segment. The accounting policies of the business segments are the same as those described in Note B: “Accounting Policies.

E. REVENUE Disaggregation of Revenue The following table provides information about disaggregated revenue by timing of revenue recognition, primary geographical market, and major product lines. Semiconductor Test Robotics Product Test Total System-on-a-chip Memory IST (in thousands) For the Year Ended December 31, 2025 Timing of Revenue Recognition Point in Time $ 1,604,419 $ 468,345 $ 108,852 $ 300,083 $ 282,252 $ 2,763,951 Over Time 285,266 36,558 20,304 $ 8,212 75,733 426,073 Total $ 1,889,685 $ 504,903 $ 129,156 $ 308,295 $ 357,985 $ 3,190,024 Geographical Market Asia Pacific $ 1,743,549 $ 497,714 $ 124,426 $ 59,883 $ 114,766 $ 2,540,338 Americas 85,200 4,957 4,730 $ 122,178 208,441 425,506 Europe, Middle East and Africa 60,936 2,232 — $ 126,234 34,778 224,180 Total $ 1,889,685 $ 504,903 $ 129,156 $ 308,295 $ 357,985 $ 3,190,024 For the Year Ended December 31, 2024 Timing of Revenue Recognition Point in Time $ 1,255,579 $ 472,279 $ 63,288 $ 356,384 $ 266,955 $ 2,414,485 Over Time 281,545 29,509 21,720 $ 8,464 64,157 405,395 Total $ 1,537,124 $ 501,788 $ 85,008 $ 364,848 $ 331,112 $ 2,819,880 Geographical Market Asia Pacific $ 1,400,149 $ 466,214 $ 78,719 $ 69,353 $ 113,263 2,127,698 Americas 92,386 15,017 6,289 $ 147,607 174,084 435,383 Europe, Middle East and Africa 44,589 20,557 — $ 147,888 43,765 256,799 Total $ 1,537,124 $ 501,788 $ 85,008 $ 364,848 $ 331,112 $ 2,819,880 For the Year Ended December 31, 2023 Timing of Revenue Recognition Point in Time $ 1,141,882 $ 356,417 $ 115,220 $ 363,238 $ 282,558 $ 2,259,315 Over Time 290,739 29,598 23,332 $ 11,945 61,369 416,983 Total $ 1,432,621 $ 386,015 $ 138,552 $ 375,183 $ 343,927 $ 2,676,298 Geographical Market Asia Pacific $ 1,214,322 $ 366,151 $ 135,502 $ 73,736 $ 103,300 $ 1,893,011 Americas 117,728 11,367 3,050 $ 147,952 199,299 479,396 Europe, Middle East and Africa 100,571 8,497 — $ 153,495 41,328 303,891 Total $ 1,432,621 $ 386,015 $ 138,552 $ 375,183 $ 343,927 $ 2,676,298 Contract Balances For the years ended December 31, 2025, 2024 and 2023, Teradyne recognized $81.6 million, $72.7 million and $108.1 million, respectively, that was included within the deferred revenue and customer advances balances at the beginning of the period. This revenue primarily relates to undelivered hardware, extended warranties, training, application support, and post contract support. Each of these represents a distinct performance obligation. As of December 31, 2025, Teradyne had $100.

O. COMMITMENTS AND CONTINGENCIES Purchase Commitments As of December 31, 2025, Teradyne had entered into non-cancelable purchase commitments for certain components and materials. The purchase commitments covered by the agreements aggregate to approximately $1,473.0 million, of which $1,415.1 million is for less than one year.Legal Claims Teradyne is subject to various legal proceedings and claims which have arisen in the ordinary course of business such as, but not limited to, patent, employment, commercial and environmental matters. Teradyne believes that it has meritorious defenses against all pending claims and intends to vigorously contest them. While it is not possible to predict or determine the outcomes of any pending claims or to provide possible ranges of losses that may arise, Teradyne believes the potential losses associated with all of these actions are unlikely to have a material adverse effect on its business, financial position or results of operations.Guarantees and Indemnification Obligations Teradyne provides indemnification, to the extent permitted by law, to its officers, directors, employees and agents for liabilities arising from certain events or occurrences, while the officer, director, employee, or agent, is or was serving, at Teradyne’s request in such capacity. Teradyne may enter into indemnification agreements with certain of its officers and directors. With respect to acquisitions, Teradyne provides indemnifications to or assumes indemnification obligations for the current and former directors, officers and employees of the acquired companies in accordance with the acquired companies’ by-laws and charter. As a matter of practice, Teradyne has maintained directors’ and officers’ liability insurance coverage including coverage for directors and officers of acquired companies. Teradyne enters into agreements in the ordinary course of business with customers, resellers, distributors, integrators and suppliers. Most of these agreements require Teradyne to defend and/or indemnify the other party against intellectual property infringement claims brought by a third party with respect to Teradyne’s products.

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

U. INCOME TAXESThe components of income before income taxes and the provision (benefit) for income taxes as shown in the consolidated statements of operations were as follows: 2025 2024 2023 (in thousands) Income from continuing operations before income taxes U.S. $ 160,212 $ 231,346 $ 307,997 Non-U.S. 493,048 377,740 217,575 Total $ 653,260 $ 609,086 $ 525,572 Provision (benefit) for income taxes from continuing operations Current: U.S. Federal $ 43,437 $ 40,296 $ 58,063 U.S. State and Local 631 2,716 2,362 Non-U.S. 87,298 62,851 54,037 Total current tax provision (benefit) $ 131,366 $ 105,863 $ 114,462 Deferred: U.S. Federal $ (29,672 ) $ (33,195 ) $ (27,459 ) U.S. State and Local (2,370 ) (4,162 ) (1,599 ) Non-U.S. (20,025 ) (9,003 ) (8,584 ) Total deferred tax provision (benefit) $ (52,067 ) $ (46,360 ) $ (37,642 ) Total: U.S. Federal $ 13,765 $ 7,101 $ 30,604 U.S. State and Local (1,739 ) (1,446 ) 763 Non-U.S. 67,273 53,848 45,453 Total provision for income taxes: $ 79,299 $ 59,503 $ 76,820 Income tax expense for 2025, 2024 and 2023 totaled $79.3 million, $59.5 million, and $76.8 million, respectively. The effective tax rate for 2025, 2024 and 2023 was 12.1%, 9.8% and 14.6%, respectively.At December 31, 2025, Teradyne’s remaining tax liability resulting from the U.S. one-time transition tax on the mandatory deemed repatriation of foreign earnings amounts to $24.6 million which will be paid in 2026.The increase in the effective rate from 2024 to 2025 is primarily attributable to decreases in benefits related to reserves for uncertain tax positions, foreign tax credits and U.S. research and development tax credits. This increase was partially offset by a shift in the geographic distribution of income which resulted in a reduction of income in higher tax rate jurisdictions.The decrease in the effective tax rate from 2023 to 2024 is primarily attributable to a shift in the geographic distribution of income which resulted in a reduction in income in higher tax rate foreign jurisdictions, the benefit of the release of reserves for uncertain tax positions as a result of the expiration of statute and a decrease in non-deductible officer’s compensation. These rate benefits were partially offset by reductions in benefits from foreign tax credits, U.S. research and development credits and the U.S. foreign derived intangible income deduction.

S. STOCK-BASED COMPENSATION Stock Compensation Plans Under Teradyne’s stock compensation plans, Teradyne grants time-based restricted stock units, performance-based restricted stock units and stock options, and employees are eligible to purchase Teradyne’s common stock through its Employee Stock Purchase Plan (“ESPP”). Service-based restricted stock unit awards granted to employees vest in equal annual installments over four years. Restricted stock unit awards granted to non-employee directors vest after a one-year period, with 100% of the award vesting on the earlier of (a) the first anniversary of the grant date or (b) the date of the following year’s Annual Meeting of Shareholders. Teradyne expenses the cost of the restricted stock unit awards subject to time-based vesting, which is determined to be the fair market value of the shares at the date of grant, ratably over the period during which the restrictions lapse. Performance-based restricted stock units (“PRSUs”) granted to Teradyne’s executive officers may have a performance metric based on relative total shareholder return (“TSR”). Teradyne’s three-year TSR performance is measured against the New York Stock Exchange (“NYSE”) Composite Index. The final number of TSR PRSUs that vest will vary based upon the level of performance achieved from 0% to 200% of the target shares. The TSR PRSUs will vest upon the three-year anniversary of the grant date. The TSR PRSUs are valued using a Monte Carlo simulation model. The number of units expected to be earned, based upon the achievement of the TSR market condition, is factored into the grant date Monte Carlo valuation. Compensation expense is recognized on a straight-line basis over the shorter of the three-year service period or the period from the grant to the date described in the retirement provisions below. Compensation expense for executive officers meeting the retirement provisions prior to the grant date is recognized during the year following the grant. Compensation expense is recognized regardless of the eventual number of units that are earned based upon the market condition, provided the executive officer remains an employee at the end of the three-year period. Compensation expense is reversed if at any time during the three-year service period the executive officer is no longer an employee, subject to the retirement and termination eligibility provisions noted below.

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