TERADYNE, INC
For the period ended Dec 31, 2025. Filed Feb 19, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 19, 2026
TER$218.22+2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-02-20.
0000950170-25-023784
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-19.
0001193125-26-059002
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 110 previous paragraphs and 110 current paragraphs.
39 unchanged; 38 reworded; 33 added; 29 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (33)
Current report
In 2025, our Semiconductor Test segment achieved considerable growth driven by robust demand from Artificial Intelligence (“AI”) applications in networking and with vertically integrated producer (“VIP”) compute solutions. Memory test revenue remained stable despite a smaller overall market, supported by share gains in high bandwidth memory (“HBM”) and DRAM final test applications. The Semiconductor Test segment’s strategic shift toward AI-driven semiconductor testing resulted in AI related customer demand driving the majority of our revenue in the second half of 2025. Looking ahead to 2026, we expect AI related customer demand to continue to represent the bulk of our revenues in the first quarter. Our results reflect our focused investments in AI applications and VIP customers, with benefits from these initiatives materializing throughout 2025 and expected to continue in 2026. In the Product Test Group, we also achieved revenue growth in 2025, bolstered primarily by strength in defense and aerospace applications.
Current report
In our Robotics segment, the fourth quarter of 2025 represented the third consecutive quarter of sequential revenue growth. During the year, we aimed at strategic partnerships with original equipment manufacturers, systems integrators, and large enterprise accounts, concentrating on high-growth verticals such as ecommerce, logistics, semiconductor, and electronics. At the same time, we also reduced costs through restructuring activities designed to better position the Robotics organization for future success.
Current report
On January 29, 2026, we and MultiLane, a leading high-speed input/output (“I/O”) test and measurement company, announced an agreement to form a joint venture, MultiLane Test Products (“MLTP”). MLTP is being created to serve the growing demand from the AI Data Center equipment market by accelerating the development of test solutions for critical high speed data connections. Under the agreement, MultiLane will contribute all the assets related to its test and measurement business to the joint venture and we will invest approximately $157 million in exchange for 75% ownership of MLTP. This transaction is expected to close in the first half of 2026 and is subject to customary closing conditions.
Current report
On May 31, 2025, we acquired privately held Quantifi Photonics (“Quantifi”), a leader in PIC test solutions for a total purchase price of $127.2 million. This acquisition enables the delivery of scalable PIC test solutions and is included in our Product Test segment. Over time, we also intend to leverage the engineering expertise and technology to enhance functionality and create additional differentiation in our Semiconductor Test business, specifically with integration into our UltraFlexplus platform.
Current report
On January 31, 2025, we acquired Infineon Technologies AG's (“Infineon”) automated test equipment technology and associated development team (“AET”) based in Regensburg, Germany for a total purchase price of 17.6 million Euros, equivalent to $18.3 million. AET adds resources and expertise to our company and strengthens the relationship between us and this key customer. AET is included in our Semiconductor Test segment.
Current report
Our capital allocation plan will continue to be focused on investing in organic and inorganic growth and returning cash to shareholders through share repurchases and dividends. During 2025, we completed the acquisitions of Quantifi and AET and additionally, we returned $778.4 million to shareholders through $702.1 million of share buybacks and $76.3 million of dividend payments.
Current report
Critical Accounting Estimates
Current report
Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired. Goodwill is assessed for impairment at the reporting unit level annually during the fourth quarter of each fiscal year, as of December 31, or more frequently if we believe indicators of impairment exist. Potential impairment is identified by comparing the fair value of a reporting unit to its carrying value, including goodwill. For our annual impairment assessment, we have the option to evaluate qualitative factors such as industry and market conditions, and entity specific financial performance and events, including changes in management, strategy and key customers. If based on our qualitative assessment it is more likely than not that the fair value of the reporting unit is less than its carry amount, we are required to perform quantitative impairment testing. If necessary, an impairment loss is recognized in an amount equal to the excess of the reporting unit’s carrying value over its fair value, up to the amount of goodwill allocated to the reporting unit.
Current report
Intangible assets acquired through a business combination typically consist of developed technologies, customer relationships, and trademarks and trade names. Long-lived assets primarily consist of property and equipment and operating lease right-of-use assets. We engage third-party valuation specialists to assist us with the initial measurement of the fair value of acquired intangible assets. We evaluate the recoverability of intangible assets and long-lived assets whenever events and changes in circumstances, such as reductions in demand or significant economic slowdowns, indicate that the carrying amount of an asset may not be fully recoverable. When indicators of impairment are present, the future undiscounted cash flows of the related asset group are compared to its carrying value. If necessary, the net book value of the underlying asset is adjusted to fair value as indicated by the sum of the expected discounted cash flows. Fair values are based on estimates of market prices and assumptions concerning the amount and timing of estimated future cash flows.
Current report
The impairment assessment of goodwill, intangible assets and long-lived assets involves critical estimates and assumptions, which may be unpredictable and inherently uncertain. These estimates and assumptions may include projected revenue growth rates, projected earnings before interest, taxes, depreciation, and amortization margins, discount rate, and comparable market multiples, specifically revenue multiples. Any changes in key assumptions could impact the result of the impairment assessment.
Current report
Business Combinations
Current report
We recognize tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The fair value of identifiable intangible assets is based on detailed cash flow valuations that use information and assumptions provided by management, for example, revenue growth rates, customer attrition rates, and discount rate. We allocate any excess purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed to goodwill. The assumptions used in the valuations for our acquisitions may differ materially from actual results depending on performance of the acquired businesses and other factors. While we believe the assumptions used were appropriate, different assumptions in the valuation of assets acquired and liabilities assumed could have a material impact on the timing and extent of impact on our statements of operations. Goodwill is assigned to reporting units as of the date of the related acquisition.
Current report
The increase in Semiconductor Test revenues of $399.8 million, or 18.8%, was driven primarily by higher sales in compute related to artificial intelligence applications and in Integrated System Test primarily related to system level testers. The decrease in Robotics revenues of $56.5 million, or 15.5%, was primarily due to lower sales of collaborative robotic arms and autonomous mobile robots. The increase in Product Test revenues of $26.9 million, or 8.1%, was primarily due to higher sales of defense and aerospace testing systems.
Current report
Our product revenues increased $365.3 million, or 15.9%, driven primarily by higher sales in compute related to artificial intelligence applications and in Integrated System Test primarily related to system level testers.
Current report
In 2025 and 2024, our five largest direct customers in aggregate accounted for 44% and 36% of our consolidated revenues, respectively. See Note V: “Segment, Geographic, and Significant Customer Information” for additional discussion of significant customer concentrations.
Current report
Product revenues gross profit percentage decreased by 0.8 points primarily due to product mix. Service revenues gross profit percentage increased by 2.9 points primarily in Semiconductor Test as a result of the sale of the DIS business on May 27, 2024.
Current report
During the year ended December 31, 2025, we recorded $29.4 million of severance charges, $24.3 million of which is related to the Robotics restructuring which impacted approximately 400 employees, $1.8 million of which was related to Product Test and $1.6 million of which was related to Semiconductor Test. During the year ended December 31, 2025, we made $15.3 million of Robotics severance payments. We expect all Robotics severance payments to be made prior to the end of the third quarter of 2026. Additionally, we recorded $4.9 million of asset impairment expenses and $2.3 million of acquisition and divestiture expenses.
Current report
Interest income decreased by $9.1 million primarily due to lower interest rates and a reduced cash balance compared to 2024. Interest expense increased by $3.2 million primarily due to borrowing from the credit facility during 2025.
Current report
The increase in income before income taxes and equity in net earnings of affiliate in Semiconductor Test was driven primarily by higher sales in compute related to artificial intelligence applications and in Integrated System Test primarily related to system level testers, partially offset by higher spending in selling and administrative and engineering and development. The decrease in income before income taxes and equity in net earnings of affiliate in Robotics was primarily due to lower sales of collaborative robotic arms, partially offset by lower operating expenses. The change in income before income taxes and equity in net earnings of affiliate in Corporate and Eliminations was primarily due to the sale of the DIS business on May 27, 2024.
Current report
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA, P.L. 119-21) was enacted, introducing significant changes to U.S. federal income tax law. Key provisions include the permanent extension of 100% bonus depreciation, immediate expensing of research and experimental expenditures, and modifications to the deduction for business interest expense. The OBBBA also reduces the deduction rates for taxation of foreign income and taxation of income from export sales. The OBBBA did not have a material impact on the consolidated financial statements for the year ended December 31, 2025.
Current report
On January 5, 2026, the Organisation for Economic Co-operation and Development (OECD/G20) Inclusive Framework released a 'side-by-side' arrangement that provides a safe harbor for U.S.-headquartered multinationals, effectively recognizing the U.S. tax system as complying with the Pillar Two GloBE rules for fiscal years beginning on or after January 1, 2026. Under this agreement, we expect our U.S. parented group and our foreign subsidiaries to be exempt from the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR) in foreign jurisdictions that adopt this safe harbor. While we do not anticipate material top-up taxes under the IIR and UTPR due to this agreement, we continue to monitor the implementation of Qualified Domestic Minimum Top-up Taxes (QDMTTs) in foreign jurisdictions, which remain unaffected by the side-by-side agreement.
Current report
Sources of Liquidity
Current report
Our Third Amended and Restated Revolving Credit Agreement, amended as of November 7, 2023 (the “Credit Agreement”) provides a six-year, senior secured revolving credit facility of $750.0 million (the “Credit Facility”). During 2025, we borrowed a combined $250.0 million under the Credit Agreement to fund our capital allocation strategy, of which $200.0 million was outstanding as of year-end. The Credit Agreement is set to expire on December 10, 2026. See Note L: “Debt” for more information regarding our Credit Agreement. As of February 19, 2026, we were in compliance with all covenants under the Credit Agreement.
Current report
Cash Flows
Current report
Operating Activities
Current report
Operating activities during 2025 provided cash of $674.4 million. Changes in operating assets and liabilities, net of businesses acquired used $72.5 million due to a $340.6 million increase in operating assets and a $268.1 million increase in operating liabilities. The increase in operating assets was primarily due to increases in accounts receivable of $305.6 million. The increase in operating liabilities was primarily due to increases in accounts payable and other liabilities of $208.8 million.
Current report
Investing Activities
Current report
Financing Activities
Current report
Material Cash Requirements
Current report
In January 2026, our Board of Directors declared a quarterly cash dividend of $0.13 per share to be paid on March 13, 2026 to shareholders of record as of February 13, 2026.
Current report
Under the ESPP and the Equity Plan, as amended, our stockholders have approved an aggregate of 33.4 million and 32.0 million shares, respectively, issuable thereunder. At our annual meeting of stockholders held May 9, 2025, our stockholders approved an amendment and restatement of the Equity Plan. The amendments, among other changes, renamed the plan to the “Equity and Cash Compensation Incentive Plan,” eliminated the then-current term end date of May 12, 2025, and added a provision that incentive stock options may not be granted without shareholder approval following the ten-year anniversary of the Board’s approval of the amended Equity Plan, which is March 24, 2035.
Current report
Comparative Stock Performance Graph
Current report
For a description of accounting changes and recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements, see Note C: “Recently Issued Accounting Pronouncements,” of this Form 10-K.
Removed paragraphs (29)
Previous report
In 2024, we saw strength in our Semiconductor Test business, with memory and compute offerings growing considerably compared to 2023. We expect mobile, automotive, and industrial will grow in 2025 and that recent advancements in AI inference may help mid-term recovery in these markets. Beyond AI compute, we are investing in other areas of the semiconductor test market that offer the opportunity for accelerating long-term growth, including power semi-conductors and the shift towards vertically integrated products ("VIPs"). We have seen the benefits start to materialize in 2024 and expect them to continue through the mid-term.
Previous report
2024 was a very weak industrial automation market resulting in a year-over-year decline in Robotics revenues while outperforming our peer group. In 2024, we built key OEM, systems integrators and large account strategic partnerships which will strengthen our go to market for years to come. Introduction of new products, including the MiR 1200 Pallet Jack will further expand our available markets to support our growth.
Previous report
On May 27, 2024, we paid 483.1 million Euros, equivalent to $524.1 million, to purchase a combination of previously issued and outstanding shares and shares newly issued by Technoprobe, S.p.A. ("Technoprobe"). The shares purchased represent 10% of the issued and outstanding shares of Technoprobe. We also received a board seat as part of the purchase. Additionally, as part of the transaction, we completed the sale of the Device Interface Solutions ("DIS") business, a component of our Semiconductor Test segment, to Technoprobe for $85.0 million in cash, net of cash and cash equivalents sold, and a customary working capital adjustment. The sale resulted in a pre-tax gain of $57.1 million recorded as 'Gain on sale of business' in the consolidated statement of operations.
Previous report
Our corporate strategy for our test businesses is to profitably grow market share while in Robotics, we plan to profitably grow revenue through the introduction of differentiated products targeting expanding markets. Our capital allocation plan will continue to be balanced between investing in organic and inorganic growth and returning cash to shareholders through share repurchases and dividends.
Previous report
Supply Chain Constraints and Inflationary Pressures
Previous report
The global supply shortage of electrical components, including semiconductor chips, impacted our supply chain in the first half of 2023. In the second half of 2023 and the full year of 2024, we saw improvements related to supply constraints and, consequently, did not experience material increases in our lead times and costs for components. In addition, in 2023 and 2024, inflationary pressures contributed to increased costs for product components and wage inflation, which had a minimal impact on our cost of products, gross margin and profit for the year. While our businesses could be impacted by supply constraints in the future, we do not anticipate supply chain constraints will have a material impact on our financial results in 2025.
Previous report
Critical Accounting Policies and Estimates
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Equity Method Investments
Previous report
We assess goodwill for impairment at least annually in the fourth quarter, as of December 31, on a reporting unit basis, or more frequently, when events and circumstances occur indicating that the recorded goodwill may be impaired. We review intangible and long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Impairment of intangible and long-lived assets would result in the asset being written down to its estimated fair value. The calculated fair value of a reporting unit or intangible or long-lived asset is dependent upon discounted cash flow (“DCF”) models, discount rates, and market multiples. DCF models rely on our forecasted mid-term plans which are subjective based on customer or market conditions and can change materially. We utilize third party specialists when determining discount rates and selected market multiples. A change in any of these key assumptions could result in a reporting unit, intangible asset, or long-lived asset being impaired in a future period.
Previous report
Convertible Debt
Previous report
We adopted Accounting Standards Update (“ASU”) ASU 2020-06 – “Debt—Debt with Conversion and Other Options and Derivatives and Hedging—Contracts in Entity’s Own Equity,” on January 1, 2022 using the modified retrospective method of adoption. In accordance with ASU 2020-06, we account for a convertible debt instrument as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. Unsettled shares are recorded in current debt, and there is no recognition of a debt discount, which was previously amortized to interest expense. Settled shares reduce the outstanding debt balance in an amount equal to the cash paid, but do not result in any gain or loss on extinguishment. We use the if-converted method in the diluted EPS calculation for convertible instruments.
Previous report
The increase in Semiconductor Test revenues of $166.7 million, or 8.5%, was driven primarily by higher tester sales for computing, ADAS, and memory applications, partially offset by lower tester sales for legacy automotive applications. The decrease in Robotics revenues of $10.4 million, or 2.8%, was driven primarily by continued weakness in the Industrial Automation market and softer sales in Universal Robots.
Previous report
Our product revenues increased $198.6 million, or 9.5%, primarily driven by higher tester sales for computing, ADAS, and memory applications, partially offset by lower tester sales for legacy automotive application. Our service revenues decreased $55.1 million, or 9.5%, primarily in Semiconductor Test related to the sale of the DIS business on May 27, 2024.
Previous report
In 2024, revenues from Samsung, a customer of our Semiconductor Test segment, accounted for 12.5% of our consolidated revenues. In 2023, revenues from Texas Instruments Inc., a customer of our Semiconductor Test segment, accounted for 10% of our consolidated revenues. In 2024 and 2023, our five largest direct customers in aggregate accounted for 36% and 32% of our consolidated revenues, respectively.
Previous report
Service and product revenues gross profit percentage increased by 4.3 points and 0.2 points, respectively, primarily due to higher volume and product and service mix.
Previous report
During the year ended December 31, 2023, we recorded a charge of $14.7 million of severance charges related to headcount reductions of 215 people primarily in Semiconductor Test and Robotics, which included charges related to a voluntary early retirement program for employees meeting certain conditions, $3.1 million of acquisition and divestiture expenses related to the Technoprobe transaction, a $1.5 million contract termination charge, and a charge of $1.1 million for an increase in environmental liabilities.
Previous report
Other (income) expense, net decreased by $6.8 million primarily due to $9.8 million loss on our call option in connection with our agreement to acquire a 10% investment in Technoprobe S.p.A, partially offset by the change in pension actuarial gains/losses, from a $2.7 million loss in 2023 to a $4.4 million gain in 2024.
Previous report
Income (Loss) Before Income Taxes
Previous report
The increase in income before income taxes in Semiconductor Test was driven primarily by higher tester sales for computing, ADAS, and memory applications, partially offset by lower tester sales for legacy automotive application. The decrease in income before income taxes in Robotics was primarily driven by continued weakness in the Industrial Automation market and softer sales in Universal Robots along with higher selling and administrative costs. The decrease in income before income taxes in All Other was driven primarily by a decrease in sales of Wireless Test products.
Previous report
The decrease in operating liabilities was due to a $48.2 million decrease in accounts payable, a $6.2 million decrease in other accrued compensation, $5.8 million of retirement plan contributions, and a $3.6 million decrease in income taxes, partially offset by a $12.2 million increase in deferred revenue and customer advance payments.
Previous report
The decrease in operating assets was due to a $71.0 million decrease in accounts receivable due to lower sales and a $5.3 million decrease in inventories, partially offset by a $43.1 million increase in prepayments and other assets due to prepayments to our contract manufacturers.
Previous report
The decrease in operating liabilities was due to a $57.2 million decrease in deferred revenue and customer advance payments, a $26.9 million decrease in income taxes, a $21.2 million decrease in accrued employee compensation, and $5.5 million of retirement plan contributions, partially offset by a $45.0 million increase in accounts payable, and a $23.0 million increase in other accrued liabilities.
Previous report
On May 27, 2024, we paid 483.1 million Euros, equivalent to $524.1 million, to purchase a combination of previously issued and outstanding shares and shares newly issued by Technoprobe, S.p.A. ("Technoprobe"). The shares purchased represent 10% of the issued and outstanding shares of Technoprobe. We also received a board seat as part of the purchase. Additionally, as part of the transaction, we completed the sale of the Device Interface Solutions ("DIS") business, a component of the Semiconductor Test segment, to Technoprobe for $85.0 million in cash, net of cash and cash equivalents sold, and a customary working capital adjustment. The sale resulted in a pre-tax gain of $57.1 million recorded as 'Gain on sale of business' in the consolidated statement of operations.
Previous report
On May 1, 2020, we entered into a credit agreement providing a three-year, senior secured revolving credit facility of $400 million. On December 10, 2021, the credit agreement was amended to extend the senior secured revolving 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. On May 16, 2024, we borrowed $185.0 million under the credit agreement to partially fund the acquisition of 10% of the issued and outstanding shares of Technoprobe. We fully repaid our borrowings on the revolving credit facility prior to December 31, 2024. As of February 20, 2025, there are no outstanding borrowings under the credit facility.
Previous report
At our annual meeting of stockholders held May 21, 2013, our stockholders approved an amendment to the 2006 Equity Plan to increase the number of shares issuable thereunder by 10.0 million, for an aggregate of 32.0 million shares issuable thereunder, and our stockholders also approved an amendment to 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 shares issuable thereunder. At our annual meeting of stockholders held May 12, 2015, our stockholders approved an amendment to the 2006 Equity Plan to extend its term until May 12, 2025. At our annual meeting of stockholders held May 7, 2021, our stockholders approved an amendment to our 1996 Employee Stock Purchase Plan to increase the number of shares issuable thereunder by 3.0 million, for an aggregate of 33.4 million shares issuable thereunder.
Previous report
Performance Graph
Previous report
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2023-07,"Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", which requires us to disclose significant segment expenses and other segment items used by the Chief Operating Decision Maker ("CODM") on an annual and interim basis as well as provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, we are required to disclose the title and position of the CODM. We retrospectively adopted and complied with this standard for the annual period ending December 31, 2024. See Note U: "Segment, Geographic and Significant Customer Information." The adoption of this standard had no impact on our results of operations, cash flows or financial condition.
Previous report
In December 2023, the FASB issued ASU 2023-09 –“Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which requires expanded disclosures relating to the tax rate reconciliation, income taxes paid, income (loss) before income tax expense (benefit) and income tax expense (benefit), requiring a greater disaggregation of information for each. The provisions of ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. The amendments in this update should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the impact of this new standard.
Previous report
In November 2024, the FASB issued ASU 2024-03-"Income Statement - Reporting Comprehensive Income -Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", which requires disclosure of additional expense information on an annual and interim basis, including the amounts of inventory purchases, employee compensation, depreciation and intangible amortization included within each income statement expense caption. This standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The amendments in this update should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the impact of this new standard.
Reworded paragraphs (38)
Previous wording
We are a leading global supplier of automated test equipment and robotics products. We design, develop, manufacture and sell automated test systems and robotics products. Our automated test systems are used to test semiconductors, wireless products, data storage and complex electronics systems in many industries including consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Our Robotics products include collaborative robotic arms and autonomous mobile robots (“AMRs”) used by global manufacturing, logistics and industrial customers to improve quality, increase manufacturing and material handling efficiency and decrease manufacturing and logistics costs. Our automated test equipment and robotics products and services include:
Current wording
We are a leading global provider of automated test equipment and robotics products. Our automated test systems are used to test semiconductors, wireless products, data storage, silicon photonics, and complex electronics systems in many industries including consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Our robotics product offerings consist primarily of collaborative robotic arms and autonomous mobile robots used by global manufacturing, logistics and industrial customers to improve quality and increase manufacturing and material handling efficiency, while reducing costs. In the first quarter of 2025, we identified opportunities for operational synergies amongst our production board test, defense and aerospace, and wireless test businesses leading to the creation of the Product Test division as a new segment effective March 2025. Our automated test equipment and robotics products and services include:
Previous wording
defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, circuit-board test and inspection (“Production Board Test”) systems, and wireless test systems (referred collectively as "All Other").
Current wording
product test (“Product Test”) systems, which includes circuit-board test and inspection systems, wireless test systems photonic integrated circuit (“PIC”) test solutions, and defense and aerospace test instrumentation and systems.
Previous wording
The market for our test products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. A few customers drive significant demand for our products both through direct sales and sales to the customer’s supply partners. We expect that sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future.
Current wording
The market for our test products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. A few customers drive sizable demand for our offerings both through direct sales and sales to the customer’s supply partners. We expect that sales of our test products will continue to be concentrated with a limited number of major customers for the foreseeable future.
Previous wording
Our financial statements are denominated in U.S. dollars. While revenues in our test businesses are predominantly in U.S. dollars, the majority of our Robotics revenue is denominated in foreign currencies. Strengthening of the U.S. dollar would negatively affect Robotics revenue growth in 2025.
Current wording
While revenues in our test businesses are predominantly in U.S. dollars, the majority of our Robotics revenue is denominated in foreign currencies. Strengthening of the U.S. dollar has, and will continue to, negatively affect Robotics revenue in 2025 and 2026, respectively.
Previous wording
We are subject to numerous United States and foreign laws and regulations, including, without limitation, tariffs, trade sanctions, trade barriers, trade embargoes, regulations relating to import-export control, technology transfer restrictions, and other laws and regulations. Additionally, United States and foreign governmental authorities have taken, and may continue to take, administrative, legislative or regulatory action that could impact our operations. We believe that our operations are in material compliance with applicable trade regulations. The costs we incurred in complying with applicable trade regulations for the year ended December 31, 2024 were not material, and we do not currently expect the cost of complying with existing trade laws and regulations to have a material adverse effect on our capital expenditures or earnings or on our competitive position in any one year. It is possible, however, that future developments, including changes in laws and regulations or government policies, could lead to material costs, and such costs may have a material adverse effect on our future business or prospects.
Current wording
We are subject to numerous U.S. and foreign laws and regulations, including, without limitation, tariffs, trade sanctions, trade barriers, trade embargoes, regulations relating to import-export control, technology transfer restrictions, and other laws and regulations. Additionally, U.S. and foreign governmental authorities have taken, and may continue to take, administrative, legislative or regulatory action that could impact our operations. We believe that our operations are in material compliance with applicable trade regulations. The costs we incurred in complying with applicable trade regulations for the year ended December 31, 2025 were not material, however, compliance with these laws has limited our ability to compete in certain regions. It is possible that future developments, including changes in laws and regulations or government policies, could lead to material costs, and such costs may have an material adverse effect on our future business or prospects.
Previous wording
In developing the expected return on U.S. Qualified Pension Plan (“U.S. Plan”) assets assumption, we evaluated input from our investment manager and pension consultants, including their forecast of asset class return expectations. We believe that 4.65% was an appropriate rate of return on assets to use for 2024. The December 31, 2024 asset allocation for our U.S. Plan was 94% invested in fixed income securities, 5% invested in equity securities, and 1% invested in other securities. Our investment manager regularly reviews the actual asset allocation and periodically rebalances the portfolio to ensure alignment with our target allocations.
Current wording
In developing the expected return on U.S. Qualified Pension Plan (“U.S. Plan”) assets assumption, we evaluated input from our investment manager and pension consultants, including their forecast of asset class return expectations. We believe that 5.05% was an appropriate rate of return on assets to use for 2025. The December 31, 2025, asset allocation for our U.S. Plan was 94% invested in fixed income securities, 5% invested in equity securities, and 1% invested in other securities. Our investment manager regularly reviews the actual asset allocation and periodically rebalances the portfolio to ensure alignment with our target allocations.
Previous wording
The discount rate that we utilized for determining future pension obligations for the U.S. Plan is based on the FTSE Pension Index adjusted for the U.S. Plan’s expected cash flows and was 5.45% at December 31, 2024, up from 4.75% at December 31, 2023. We estimate that in 2025 we will recognize approximately $0.1 million of pension expense for the U.S. Plan. The U.S. Plan pension expense estimate for 2025 is based on a 5.45% discount rate and a 5.05% return on assets. Future pension expense or income will depend on future investment performance, changes in future discount rates and various other factors related to the employee population participating in our pension plans.
Current wording
The discount rate that we utilized for determining future pension obligations for the U.S. Plan is based on the FTSE Pension Index adjusted for the U.S. Plan’s expected cash flows and was 5.30% at December 31, 2025, down from 5.45% at December 31, 2024. We estimate that in 2026 we will recognize approximately $0.1 million of pension income for the U.S. Plan. The U.S. Plan pension income estimate for 2026 is based on a 5.30% discount rate and a 5.10% return on assets. Future pension expense or income will depend on future investment performance, changes in future discount rates and various other factors related to the employee population participating in our pension plans.
Previous wording
Gross profit as a percent of total revenues increased by 1.1 points, primarily due to a higher volume and product and service mix.
Current wording
Gross profit as a percent of total revenues decreased by 0.3 points, primarily due to product mix.
Previous wording
During the year ended December 31, 2023, we recorded an inventory provision of $28.4 million included in cost of revenues, primarily due to downward revisions to previously forecasted demand levels for certain products. Of the $28.4 million of total excess and obsolete provisions, $22.5 million was related to Semiconductor Test, $2.3 million was related to Robotics, and $3.6 million was related to All Other.
Current wording
During the year ended December 31, 2025, we recorded an inventory provision of $25.8 million included in cost of revenues, primarily due to downward revisions to previously forecasted demand levels for certain products. Of the $25.8 million of total excess and obsolete provisions, $17.5 million was related to Semiconductor Test, $6.0 million was related to Robotics, and $2.2 million was related to Product Test.
Previous wording
During the year ended December 31, 2024, we recorded an inventory provision of $18.9 million included in cost of revenues, primarily due to downward revisions to previously forecasted demand levels for certain products. Of the $18.9 million of total excess and obsolete provisions, $13.6 million was related to Semiconductor Test, $2.3 million was related to Robotics, and $3.1 million was related to All Other.
Current wording
During the year ended December 31, 2024, we recorded an inventory provision of $18.9 million included in cost of revenues, primarily due to downward revisions to previously forecasted demand levels for certain products. Of the $18.9 million of total excess and obsolete provisions, $13.6 million was related to Semiconductor Test, $2.3 million was related to Robotics, and $3.1 million was related to Product Test.
Previous wording
During the years ended December 31, 2024 and 2023, we scrapped $10.6 million and $26.4 million of inventory, respectively, and sold $2.2 million and $5.2 million of previously written-down or written-off inventory, respectively. As of December 31, 2024, we had inventory related reserves for amounts which had been written-down or written-off totaling $141.4 million. We have no pre-determined timeline to scrap the remaining inventory.
Current wording
During the years ended December 31, 2025, and 2024, we scrapped $11.8 million and $10.6 million of inventory, respectively, and sold $3.6 million and $2.2 million of previously written-down or written-off inventory, respectively. As of December 31, 2025, we had inventory related reserves for amounts which had been written-down or written-off totaling $151.8 million. We have no pre-determined timeline to scrap the remaining inventory.
Previous wording
The increase of $39.7 million in selling and administrative expenses was primarily due to higher sales and marketing spending in Semiconductor Test.
Current wording
The increase of $31.8 million in selling and administrative expenses was primarily due to higher spending in Semiconductor Test partially offset by lower spending in Robotics.
Previous wording
The increase of $42.8 million in engineering and development expenses was primarily due to higher spending in Semiconductor Test.
Current wording
The increase of $43.7 million in engineering and development expenses was primarily due to higher spending in Semiconductor Test partially offset by lower spending in Robotics.
Previous wording
We account for investments using the equity method of accounting when it has significant influence over the financial and operating policies, but not control, of the investee. The equity method investments are initially recorded at cost and included in the 'Equity method investment' in the consolidated balance sheet. We record our share of investee's net income or loss and other comprehensive income, and the amortization of equity method basis difference, calculated as the difference between the investment and the amount of underlying equity in net assets acquired, on a 3-month lag, which is applied consistently from period to period. Our share of investee's net income and the amortization of equity method basis difference are reported in 'Equity in net earnings of affiliate' in the consolidated statement of operations. We include our share of investee's other comprehensive income and a cumulative translation adjustment in the consolidated statements of comprehensive income. We monitor on an ongoing basis its equity method investments for indicators of other-than-temporary declines in fair value below carrying value.
Current wording
Income Before Income Taxes and Equity in Net Earnings of Affiliate
Previous wording
Included in Corporate and Eliminations are gain on sale of business, interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, severance charges, pension and postretirement plan actuarial gains (losses), acquisition and divestiture related fees, legal and environmental fees, contract termination settlement charge, and modification of outstanding equity awards.
Current wording
Included in Corporate and Eliminations are gain on sale of business, interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, severance charges, pension and postretirement plan actuarial gains (losses), acquisition and divestiture related expenses, legal and environmental fees, contract termination settlement charge, and modification of outstanding equity awards.
Previous wording
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 decreases in expense 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.
Current wording
Income tax expense for 2025 and 2024 totaled $79.3 million and $59.5 million, respectively. The effective tax rate for 2025 and 2024 was 12.1% and 9.8%, respectively. The increase in the effective tax rate from the year ended December 31, 2024, to the year ended December 31, 2025, is primarily attributable to decreases in benefits related to reserves for uncertain tax positions, foreign tax credits and U.S. research and development tax credits. This increase was partially offset by a shift in the geographic distribution of income which resulted in a reduction of income in higher tax rate jurisdictions.
Previous wording
We qualify for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board under which certain headcount and spending requirements must be met. The tax savings attributable to the Singapore tax holiday for the years ended December 31, 2024 and 2023 were $17.1 million or $0.10 per diluted share and $1.4 million or $0.01 per diluted share, respectively. In November 2020, we entered into an agreement with the Singapore Economic Development Board which extended our Singapore tax holiday under substantially similar terms to the agreement which expired on December 31, 2020. The new tax holiday is scheduled to expire on December 31, 2025.
Current wording
We qualify for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board under which certain headcount and spending requirements must be met. The tax savings attributable to the Singapore tax holiday for the years ended December 31, 2025, and 2024 were $21.6 million or $0.14 per diluted share and $17.1 million or $0.10 per diluted share, respectively. In December 2025, we entered into an agreement with the Singapore Economic Development Board which extended our Singapore tax holiday under substantially similar terms to the agreement which expired on December 31, 2025. The new tax holiday is scheduled to expire on December 31, 2035.
Previous wording
Capital Resources and Material Cash Requirements
Current wording
Capital Resources and Material Cash Requirement
Previous wording
Our cash, cash equivalents and marketable securities balance decreased by $213.4 million in 2024 to $723.8 million. Cash decreased due to investments in businesses for $532.1 million, stock repurchases in the amount of $198.6 million, and quarterly cash dividend payments in the amount of $76.4 million, partially offset by proceeds from the sale of business and cash generated by our global operations.
Current wording
Our cash, cash equivalents and marketable securities balance decreased by $275.5 million in 2025 to $448.3 million. Cash decreased primarily due to stock repurchases in the amount of $702.1 million and acquisitions of businesses in the amount of $144.4 million, partially offset by operating cash proceeds.
Previous wording
Operating activities during 2024 provided cash of $672.2 million. Changes in operating assets and liabilities used cash of $23.9 million. This was due to a $75.5 million decrease in operating assets and a $51.6 million decrease in operating liabilities.
Current wording
Operating activities during 2024 provided cash of $672.2 million. Changes in operating assets and liabilities used cash of $23.9 million. This was due to a $75.5 million decrease in operating assets and a $51.6 million decrease in operating liabilities. The decrease in operating assets was primarily due to a decrease in other assets of $119.5 million, partially offset by a $52.7 million increase in accounts receivable. The decrease in operating liabilities was primarily due to a $48.2 million decrease in accounts payable.
Previous wording
Investing activities during 2023 used cash of $179.6 million, due to $161.9 million used for purchases of marketable securities, $159.6 million used for purchases of property, plant and equipment, and $5.0 million used for issuance of convertible loans, partially offset by $85.0 million and $61.4 million in proceeds from maturities and sales of marketable securities, respectively, and $0.5 million in proceeds from the cancellation of Teradyne owned life insurance policies related to the cash surrender value.
Current wording
Investing activities during 2025 included $224.0 million used for purchases of property, plant, and equipment, $144.4 million used for acquisition of businesses, net of cash and cash equivalents acquired, $33.0 million used for purchases of marketable securities, and $25.5 million used for purchase of investment in a business, partially offset by $49.0 million provided by proceeds from maturities of marketable securities and $9.3 million provided by proceeds from sales of marketable securities.
Previous wording
Investing activities during 2024 used cash of $622.3 million, comprised of $532.1 million used for investments in businesses, $198.1 million used for purchases of property, plant and equipment, and $45.8 million used for purchases of marketable securities, partially offset by $90.3 million in proceeds from the sale of a business, $38.4 million and $24.0 million in proceeds from the maturities and sales of marketable securities, respectively, and $0.9 million in proceeds from life insurance.
Current wording
Investing activities during 2024 included $532.1 million used for investments in businesses, $198.1 million used for purchases of property, plant and equipment, and $45.8 million used for purchases of marketable securities, partially offset by $90.3 million in proceeds from the sale of a business, $38.4 million and $24.0 million in proceeds from the maturities and sales of marketable securities, respectively, and $0.9 million in proceeds from life insurance.
Previous wording
Financing activities during 2023 used cash of $501.9 million, due to $397.2 million used for the repurchase of 3.9 million shares of common stock at an average price of $102.47 per share, $67.9 million used for dividend payments, $50.3 million used for the payments of convertible debt principal, and $20.8 million used for payments related to net settlement of employee stock compensation awards, partially offset by $34.3 million from the issuance of common stock under employee stock purchase and stock option plans.
Current wording
Financing activities during 2025 included $702.1 million used for repurchase of common stock, $76.3 million used for dividend payments, and $15.7 million used for payments related to net settlement of employee stock compensation awards, partially offset by net proceeds from borrowings on revolving credit facility of $200.0 million and $31.9 million from issuance of common stock under stock purchase and stock option plans.
Previous wording
Financing activities during 2024 used cash of $251.8 million, due to $198.6 million used for the repurchase of 1.7 million shares of common stock at an average price of $114.63 per share, $76.4 million used for dividend payments, and $14.1 million used for payments related to net settlement of employee stock compensation awards, partially offset by $37.3 million from the issuance of common stock under employee stock purchase and stock option plans.
Current wording
Financing activities during 2024 included $198.6 million used for the repurchase of common stock, $76.4 million used for dividend payments, and $14.1 million used for payments related to net settlement of employee stock compensation awards, partially offset by $37.3 million from the issuance of common stock under employee stock purchase and stock option plans.
Previous wording
In January 2024, May 2024, August 2024 and November 2024, our Board of Directors declared a quarterly cash dividend of $0.12 per share. Total dividend payments in 2024 were $76.4 million. In January 2023, May 2023, August 2023 and November 2023, our Board of Directors declared a quarterly cash dividend of $0.11 per share. Total dividend payments in 2023 were $67.9 million.
Current wording
In January 2025, May 2025, August 2025 and November 2025, our Board of Directors declared a quarterly cash dividend of $0.12 per share. Total dividend payments in 2025 were $76.3 million. In January 2024, May 2024, August 2024 and November 2024, our Board of Directors declared a quarterly cash dividend of $0.12 per share. Total dividend payments in 2024 were $76.4 million.
Previous wording
In January 2023, our Board of Directors cancelled the 2021 repurchase program and approved a new repurchase program for up to $2.0 billion of common stock. In 2024, we repurchased 1.7 million shares of common stock for $198.6 million, which excludes related excise tax, at an average price of $114.63 per share. In 2023, we repurchased 3.9 million shares of common stock for $397.2 million, which excludes related excise tax, at an average price of $102.47 per share against the 2023 repurchase program. The cumulative repurchases as of December 31, 2024, under the 2023 repurchase program, were 5.6 million shares of common stock for $595.2 million, exclusive of tax, at an average price per share of $106.21. In 2025, we intend to repurchase up to $400.0 million.
Current wording
In January 2023, our Board of Directors approved a repurchase program for up to $2.0 billion of common stock. In 2025, we repurchased 6.3 million shares of common stock for $702.1 million, which excludes related excise tax, at an average price of $112.21 per share. In 2024, we repurchased 1.7 million shares of common stock for $198.6 million, which excludes related excise tax, at an average price of $114.63 per share. The cumulative repurchases as of December 31, 2025, under the 2023 repurchase program, were 12.0 million shares of common stock for $1,297.3 million, which excludes related excise tax, at an average price per share of $109.38.
Previous wording
At December 31, 2024, our future contractual obligations were related to debt, leases, retirement plan liabilities, deferred tax benefits, and purchase obligations. See Note K. “Debt”, Note J. “Leases”, Note Q. “Retirement Plans”, and Note T. “Income Taxes” of Notes to Consolidated Financial Statements in this Annual Report for information about those obligations, which Notes are incorporated by reference into this section. Our purchase obligations were approximately $419.8 million, with $409.6 million expected to be paid within twelve months.
Current wording
At December 31, 2025, our future contractual obligations were related to debt, leases, retirement plan liabilities, deferred tax benefits, and purchase obligations. See Note L: “Debt,” Note K: “Leases,” Note R: “Retirement Plans,” and Note U: “Income Taxes” of Notes to Consolidated Financial Statements in this Annual Report for information about those obligations, which Notes are incorporated by reference into this section. Our purchase obligations were approximately $1,473.0 million, with $1,415.1 million expected to be paid within twelve months.
Previous wording
We expect operations to continue to be the primary source of cash to operate the business and meet material cash commitments, including any payments of convertible debt principal, our stock repurchase program, our quarterly dividends, our office lease obligations, contractual obligations related to inventory purchases and the construction of new facilities. We believe our cash, cash equivalents and marketable securities balance will be sufficient to pay our quarterly dividend and meet our working capital and expenditure needs for at least the next twelve months. Inflation has not had a significant long-term impact on earnings.
Current wording
We believe our cash, cash equivalents, marketable securities and senior secured revolving credit facility will be sufficient to pay our quarterly dividend and meet our working capital and expenditure needs for at least the next twelve months. Inflation has not had a significant long-term impact on earnings.
Previous wording
For the year ended December 31, 2024, our pension expense, which includes the U.S. Qualified Pension Plan (“U.S. Plan”), certain qualified plans for non-U.S. subsidiaries, and a U.S. Supplemental Executive Defined Benefit Plan, was approximately $0.1 million. Pension expense is calculated based upon a number of actuarial assumptions. Discount rate and expected return on assets are two assumptions which are important elements of pension plan expense and asset/liability measurement. We evaluate our discount rate and expected rate of return on assets assumptions annually on a plan and country specific basis. We evaluate other assumptions related to demographic factors, such as retirement age, mortality and turnover periodically, and update them to reflect our experience and expectations for the future.
Current wording
For the year ended December 31, 2025, our pension expense, which includes the U.S. Qualified Pension Plan (“U.S. Plan”), certain qualified plans for non-U.S. subsidiaries, and a U.S. Supplemental Executive Defined Benefit Plan, was approximately $4.3 million. Pension expense is calculated based upon a number of actuarial assumptions. Discount rate and expected return on assets are two assumptions which are important elements of pension plan expense and asset/liability measurement. We evaluate our discount rate and expected rate of return on assets assumptions annually on a plan and country specific basis. We evaluate other assumptions related to demographic factors, such as retirement age, mortality and turnover periodically, and update them to reflect our experience and expectations for the future.
Previous wording
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 4.65% was an appropriate rate of return on assets to use for 2024. The December 31, 2024 asset allocation for our U.S. Plan was 94.0% invested in fixed income securities, 5% invested in equity securities, and 1% invested in other securities. Our investment manager regularly reviews the actual asset allocation and periodically rebalances the portfolio to ensure alignment with our target allocations.
Current wording
In developing the expected return on U.S. Plan assets assumption, we evaluated input from our investment manager and pension consultants, including their forecast of asset class return expectations. We believe that 5.05% was an appropriate rate of return on assets to use for 2025. The December 31, 2025, asset allocation for our U.S. Plan was 94.0% invested in fixed income securities, 5% invested in equity securities, and 1% invested in other securities. Our investment manager regularly reviews the actual asset allocation and periodically rebalances the portfolio to ensure alignment with our target allocations.
Previous wording
The discount rate that we utilized for determining future pension obligations for the U.S. Plan is based on the FTSE Pension Index adjusted for the U.S. Plan’s expected cash flows and was 5.45% at December 31, 2024, up from 4.75% at December 31, 2023. We estimate that in 2025, we will recognize approximately $0.1 million of pension expense for the U.S. Plan. The U.S. Plan pension expense estimate for 2025 is based on a 5.45% discount rate and a 5.05% return on assets. Future pension expense or income will depend on future investment performance, changes in future discount rates and various other factors related to the employee population participating in our pension plans.
Current wording
The discount rate that we utilized for determining future pension obligations for the U.S. Plan is based on the FTSE Pension Index adjusted for the U.S. Plan’s expected cash flows and was 5.30% at December 31, 2025, down from 5.45% at December 31, 2024. We estimate that in 2026 we will recognize approximately $0.1 million of pension income for the U.S. Plan. The U.S. Plan pension income estimate for 2026 is based on a 5.30% discount rate and a 5.10% return on assets. Future pension expense or income will depend on future investment performance, changes in future discount rates and various other factors related to the employee population participating in our pension plans.
Previous wording
The assets of the U.S. Plan consist substantially of fixed income securities. U.S. Plan assets have decreased from $112.6 million at December 31, 2023 to $81.4 million at December 31, 2024, while the U.S. Plan’s liability decreased from $101.1 million at December 31, 2023 to $69.4 million at December 31, 2024.
Current wording
The assets of the U.S. Plan consist substantially of fixed income securities. U.S. Plan assets have decreased from $81.4 million at December 31, 2024 to $80.6 million at December 31, 2025, while the U.S. Plan’s liability decreased from $69.4 million at December 31, 2024 to $68.6 million at December 31, 2025.
Previous wording
Our funding policy is to make contributions to our pension plans in accordance with local laws and to the extent that such contributions are tax deductible. During 2024, we made contributions of $3.1 million to the U.S. supplemental executive defined benefit pension plan, and $1.0 million to certain qualified plans for non-U.S. subsidiaries. In 2025, we expect to contribute approximately $3.3 million to the U.S. supplemental executive defined benefit pension plan. Contributions to be made in 2025 to certain qualified plans for non-U.S. subsidiaries are based on local statutory requirements and are estimated at approximately $1.1 million.
Current wording
Our funding policy is to make contributions to our pension plans in accordance with local laws and to the extent that such contributions are tax deductible. During 2025, we made contributions of $3.3 million to the U.S. supplemental executive defined benefit pension plan, and $1.2 million to certain qualified plans for non-U.S. subsidiaries. In 2026, we expect to contribute approximately $3.6 million to the U.S. supplemental executive defined benefit pension plan. Contributions to be made in 2026 to certain qualified plans for non-U.S. subsidiaries are based on local statutory requirements and are estimated at approximately $1.7 million.
Previous wording
In addition to our 1996 Employee Stock Purchase Plan discussed in Note R: “Stock-Based Compensation” in Notes to Consolidated Financial Statements, we have a 2006 Equity and Cash Compensation Incentive Plan (the “2006 Equity Plan”) under which equity securities are authorized for issuance. The 2006 Equity Plan was initially approved by stockholders on May 25, 2006.
Current wording
As of December 31, 2025, our stockholders have approved two equity compensations plans under which equity securities are authorized for issuance: our 1996 Employee Stock Purchase Plan (the “ESPP”), as discussed in Note S: “Stock-Based Compensation” in Notes to Consolidated Financial Statements, as well as our Equity and Cash Compensation Incentive Plan (the “Equity Plan”). The plans were initially approved by our stockholders on March 19, 1996 and May 12, 2006, respectively, and most recently approved as amended on May 7, 2021, and May 12, 2025, respectively.
Previous wording
Includes 1,527,351 shares of restricted stock units that are not included in the calculation of the weighted average exercise price.
Current wording
Includes 1,634,922 shares of restricted stock units that are not included in the calculation of the weighted average exercise price.
Previous wording
Consists of 3,638,237 securities available for issuance under the 2006 Equity Plan and 3,224,044 of securities available for issuance under the Employee Stock Purchase Plan.
Current wording
Consists of 3,050,235 securities available for issuance under the 2006 Equity Plan and 3,176,598 of securities available for issuance under the Employee Stock Purchase Plan.
Previous wording
The purpose of the 2006 Equity Plan is to motivate employees, officers and directors by providing equity ownership and compensation opportunities in Teradyne. The aggregate number of shares available under the 2006 Equity Plan as of December 31, 2024 was 3,638,237 shares of our common stock. The 2006 Equity Plan authorizes the grant of stock-based awards in the form of (1) non-qualified and incentive stock options, (2) stock appreciation rights, (3) restricted stock awards and restricted stock unit awards, (4) phantom stock, and (5) other stock-based awards. Awards may be tied to time-based vesting schedules and/or performance-based vesting measured by reference to performance criteria chosen by the Compensation Committee of the Board of Directors, which administers the 2006 Equity Plan. Awards may be made to any employee, officer, consultant and advisor of Teradyne and our subsidiaries, as well as to our directors. The maximum number of shares of stock-based awards that may be granted to one participant during any one fiscal year is 2,000,000 shares of common stock.
Current wording
The purpose of the 2006 Equity Plan is to motivate employees, officers and directors by providing equity ownership and compensation opportunities in Teradyne. The aggregate number of shares available under the 2006 Equity Plan as of December 31, 2025, was 3,050,235 shares of our common stock. The 2006 Equity Plan authorizes the grant of stock-based awards in the form of (1) non-qualified and incentive stock options, (2) stock appreciation rights, (3) restricted stock awards and restricted stock unit awards, (4) phantom stock, and (5) other stock-based awards. Awards may be tied to time-based vesting schedules and/or performance-based vesting measured by reference to performance criteria chosen by the Compensation Committee of the Board of Directors, which administers the 2006 Equity Plan. Awards may be made to any employee, officer, consultant and advisor of Teradyne and our subsidiaries, as well as to our directors. The maximum number of shares of stock-based awards that may be granted to one participant during any one fiscal year is 2,000,000 shares of common stock.
Previous wording
As of December 31, 2024, total unrecognized compensation expense related to non-vested restricted stock units and options was $82.6 million and is expected to be recognized over a weighted average period of 2.5 years.
Current wording
As of December 31, 2025, total unrecognized compensation expense related to non-vested restricted stock units and options was $97.3 million and is expected to be recognized over a weighted average period of 2.6 years.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
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 and future revenues. This quarterly process identifies obsolete and excess inventory. Obsolete inventory, which represents items for which there is no demand, is fully reserved. Excess inventory, which represents inventory items that are not expected to be consumed within the forecasted demand window, is written down to estimated net realizable value.
Previous report — wording carried elsewhere
Income tax expense for 2024 and 2023 totaled $59.5 million and $76.8 million, respectively. The effective tax rate for 2024 and 2023 was 9.8% and 14.6%, respectively.
Previous report — wording carried elsewhere
The decrease in operating assets was primarily due to a decrease in other assets and inventory of $119.5 million and $8.7 million respectively, partially offset by a $52.7 million increase in accounts receivable, driven by higher sales at year-end.
Previous report — wording carried elsewhere
Operating activities during 2023 provided cash of $585.2 million. Changes in operating assets and liabilities used cash of $9.6 million. This was due to a $33.2 million decrease in operating assets and a $42.8 million decrease in operating liabilities.