Teradyne (TER) 10-K risk factor changes: FY2016 vs FY2015

| [removed: x] [added: ☒] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

For the fiscal year ended December 31, [removed: 2015][added: 2016]

| [removed: ¨] [added: ☐] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

Yes [removed: x] [added: ☒] No [removed: ¨][added: ☐]

Yes [removed: ¨] [added: ☐] No [removed: x][added: ☒]

Large accelerated filer [removed: x] [added: ☒] Accelerated filer [removed: ¨] [added: ☐] Non-accelerated filer [removed: ¨] [added: ☐] Smaller reporting company [removed: ¨][added: ☐]

The aggregate market value of the voting stock held by non-affiliates of the registrant as of July [removed: 2, 2015] [added: 1, 2016] was approximately [removed: $4.1] [added: $3.9] 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 [removed: 22, 2016] [added: 24, 2017] was [removed: 204,336,493] [added: 200,302,178] shares.

Portions of the registrant’s proxy statement in connection with its [removed: 2016] [added: 2017] annual meeting of shareholders are incorporated by reference into Part III of this Form 10-K.

| Item 1. | | [removed: [Business](#toc126262_2)] [added: [Business](#toc274101_2)] | | | 1 | |

| Item 1A. | | [Risk [removed: Factors](#toc126262_3)] [added: Factors](#toc274101_3)] | | | 9 | |

| Item 1B. | | [Unresolved Staff [removed: Comments](#toc126262_4)] [added: Comments](#toc274101_4)] | | | [removed: 17] [added: 19] | |

| Item 2. | | [removed: [Properties](#toc126262_5)] [added: [Properties](#toc274101_5)] | | | [removed: 18] [added: 19] | |

| Item 3. | | [Legal [removed: Proceedings](#toc126262_6)] [added: Proceedings](#toc274101_6)] | | | [removed: 18] [added: 19] | |

| Item 4. | | [Mine Safety [removed: Disclosure](#toc126262_7)] [added: Disclosure](#toc274101_7)] | | | [removed: 18] [added: 19] | |

| [PART [removed: II.](#toc126262_8)] [added: II.](#toc274101_8)] | | | | | | [removed: [](#toc126262_8)] [added: [](#toc274101_8)] |

| Item 5. | | [Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity [removed: Securities](#toc126262_9)] [added: Securities](#toc274101_9)] | | | [removed: 19] [added: 20] | |

| [removed: Item 6. | | [Selected Financial Data](#toc126262_10) | | | 20] [added: Item 6:] | [added: _Selected_ _Financial Data_] |

| Item 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operation](#toc126262_11)] [added: Operation](#toc274101_11)] | | | [removed: 21] [added: 22] | |

| Item 7A. | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#toc126262_12)] [added: Risk](#toc274101_12)] | | | [removed: 39] [added: 42] | |

| Item 8. | | [Financial Statements and Supplementary [removed: Data](#toc126262_13)] [added: Data](#toc274101_13)] | | | [removed: 41] [added: 44] | |

| Item 9. | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#toc126262_14)] [added: Disclosure](#toc274101_14)] | | | [removed: 98] [added: 104] | |

| Item 9A. | | [Controls and [removed: Procedures](#toc126262_15)] [added: Procedures](#toc274101_15)] | | | [removed: 98] [added: 104] | |

| [removed: Item 9B. | | [Other Information](#toc126262_16) | | | 98] [added: Item 9B:] | [added: _Other_ _Information_] |

| [PART [removed: III.](#toc126262_17)] [added: III.](#toc274101_17)] | | | | | | [removed: [](#toc126262_17)] [added: [](#toc274101_17)] |

| Item 10. | | [Directors, Executive Officers and Corporate [removed: Governance](#toc126262_18)] [added: Governance](#toc274101_18)] | | | [removed: 99] [added: 105] | |

| Item 11. | | [Executive [removed: Compensation](#toc126262_19)] [added: Compensation](#toc274101_19)] | | | [removed: 99] [added: 105] | |

| Item 12. | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#toc126262_20)] [added: Matters](#toc274101_20)] | | | [removed: 99] [added: 105] | |

| [removed: Item 13. |] [added: Item 13:] | [removed: [Certain] [added: _Certain] Relationships and [removed: Related Transactions,] [added: Related_ _Transactions,] and Director [removed: Independence](#toc126262_21) | | | 99 |] [added: Independence_] |

| Item 14. | | [Principal Accountant Fees and [removed: Services](#toc126262_22)] [added: Services](#toc274101_22)] | | | [removed: 99] [added: 105] | |

| [PART [removed: IV.](#toc126262_23)] [added: IV.](#toc274101_23)] | | | | | | [removed: [](#toc126262_23)] [added: [](#toc274101_23)] |

| Item 15. | | [Exhibits and Financial Statement [removed: Schedule](#toc126262_24)] [added: Schedule](#toc274101_24)] | | | [removed: 100] [added: 106] | |

Our industrial automation products include collaborative robots used by global manufacturing and light industrial customers to improve [removed: quality and] [added: quality,] increase manufacturing [removed: efficiency.][added: efficiency and decrease manufacturing costs.]

| [added: Wireless Test] | [removed: •] | | [removed: wireless test (“Wireless Test”) systems; and] [added: 5] | [added: | | | 11 | | | | 11 | |]

| [added: Industrial Automation] | [removed: •] | | [removed: industrial automation (“Industrial Automation”) products.] [added: 6] | [added: | | | 3 | | | | — | |]

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

[added: In 2015, we acquired] Universal Robots [removed: is] [added: A/S (“Universal Robots”),] 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 [removed: quality and] [added: quality,] increase manufacturing [removed: efficiency.][added: efficiency and decrease manufacturing costs.]

[removed: The acquisition of Universal] Robots provides a growth engine to our business and complements our [added: existing System Test and Wireless Test segments.]

[removed: No contingent] [added: Contingent] consideration [removed: was] paid for [removed: 2015.][added: 2015 was $15 million.]

The [removed: maximum] remaining [added: maximum] contingent consideration that could be paid is [removed: $1.1] [added: $50] million.

10-K 1 d274101d10k.htm FORM 10-K

Yes ☒ No ☐

Yes ☒ No ☐

Yes ☐ No ☒

| [PART I.](#toc274101_1) | | | | | | [](#toc274101_1) |

| Item 16. | | [Form 10-K Summary](#toc274101_24a) | | | 107 | |

| | | [Signatures](#toc274101_25) | | | 113 | |

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

| | • | | wireless test (“Wireless Test”) systems. |

The acquisition of Universal

Foundries for wafer manufacturing and OSATs for test and assembly.

UR10, each with different weight carrying capacity and arm reach.

Under the LitePoint brand name, these products provide test solutions utilized in the development and manufacturing of wireless devices.

The world’s leading makers of smart phones, tablets, notebooks, laptops, peripherals, and Internet-of-Things (IoT) devices rely on LitePoint technology to ensure their products get 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 are deployed across the entire production eco-system from the wireless chipset suppliers to the consumer brands.

Wireless devices are often tested at multiple points 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 market unit volumes have increased, the quantity of units and the amount of data that must be analyzed for a successful product launch continues to grow.

LitePoint products 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 wireless performance to improve range, data throughput and battery life.

Testing also verifies product specifications for product quality control.

As markets become increasingly 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, and GPS.

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, GLONASS and others.

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 the growing use of NFC technology for payments with mobile devices.

Cellular standards include 2G, 3G, 4G and emerging 5G mobile phone technologies.

It is used for calibration and verification of smartphones, tablets, small cell wireless gateways and embedded cellular modules.

An important component in all wireless systems is the analog RF front end.

The performance of these components is continually pushed higher as device makers add more bands, channels, antennas and higher data rates.

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 solutions provide rapid development of high volume manufacturing solutions with a minimum of engineering effort by customers.

In 2016, revenues from Taiwan Semiconductor Manufacturing Company Ltd. and JA Mitsui Leasing, Ltd. accounted for 12% and 12%, respectively, of our consolidated revenues.

We estimate product demand driven by a single OEM customer, 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 25%, 23%, and 22% of our consolidated revenues in 2016, 2015, and 2014, respectively.

The loss of, or significant decrease in demand from, this OEM customer, or any of our five largest direct customers, could have a material adverse effect on our business, results of operations and financial condition.

We sell in these areas predominantly through a direct sales force, except for Industrial Automation segment products which are sold through distributors.

| | | $ | 729.7 | | | $ | 615.7 | |

10-K 1 d126262d10k.htm 10-K

| --- | --- | --- |

| [PART I.](#toc126262_1) | | | | | | [](#toc126262_1) |

| | | [Signatures](#toc126262_25) | | | 106 | |

On June 11, 2015, we 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.

existing System Test and Wireless Test segments.

The total purchase price for Universal Robots was approximately $315 million.

In 2013, we acquired ZTEC Instruments Inc. (“ZTEC”), a supplier of modular wireless test instruments.

The acquisition of ZTEC expands our Wireless Test segment into the design verification test of wireless components and chipsets.

None of the contingent consideration was paid.

In 2011, we acquired LitePoint Corporation (“LitePoint”) to expand our product portfolio of test equipment in the wireless test sector.

LitePoint designs, develops, and supports advanced wireless test solutions for the manufacturing of wireless devices, including smart phones, tablets, notebooks, laptops, personal computer peripherals, and other Wi-Fi, Bluetooth and cellular enabled devices.

The total purchase price for LitePoint was approximately $646 million.

LitePoint and ZTEC represent our Wireless Test segment.

wafers, and OSATs that provide test and assembly services for the final packaged devices to both Fabless companies and IDMs.

LitePoint designs, develops, and supports advanced wireless test equipment for the manufacturing of wireless devices, including smart phones, tablets, notebooks, laptops, personal computer peripherals, and other Wi-Fi, Bluetooth, Near Field Communication (“NFC”) and cellular enabled devices.

LitePoint collaborates with developers, chipset/component manufacturers, and manufacturing leaders to create agile systems designed to ensure the quality of wireless products manufactured in very large numbers.

Using easy-to-deploy, innovative test methodologies, LitePoint’s IQ product line is designed for high-volume, low-cost production test, and falls into two test categories: cellular and connectivity.

Our acquisition of ZTEC expanded our wireless product offerings into modular wireless test instruments for the design verification test of wireless components and chipsets.

_Cellular_

As the industry’s first “multi-DUT” test solution, IQxstream greatly increased production output through the implementation of parallel test methods of multiple devices.

IQxstream is complemented by IQvector™, a turnkey production-optimized testing package that supports the leading cellular chipset solutions, which allows manufacturers to ramp volume production in a matter of weeks, rather than months.

Drivers for IQxstream are found in the test software solutions provided by leading cellular chipset companies including Qualcomm, Intel, MediaTek, Spreadtrum, Marvell and others.

_Connectivity_

We offer a comprehensive range of test equipment for multi-DUT connectivity testing.

The IQxel™ family enables calibration and verification of the latest Wi-Fi standard 802.11ac taking wireless data rates beyond the gigabit per second barrier.

The IQxel family supports multiple bandwidth and channel configurations, MIMO antenna arrangements, Bluetooth™ Classic and Low Energy, and covers the full range of communication standards.

These solutions target manufacturers of networking equipment, Internet access devices, Internet of Things (IoT) products and embedded modules used in smartphones, tablets, and PCs.

We were the first to introduce a production focused parametric test solution for NFC technology with our IQnfc™ addressing the growing use of NFC technology for mobile payments with smartphones.

To complement the IQ family of connectivity testers, we offer IQfact+™ a turnkey, chipset-optimized, customizable software library covering over 300 wireless IC solutions, enabling the rapid development of volume manufacturing solutions with a minimum of engineering effort by our customers.

Similar to our cellular products, drivers for our connectivity products are found in the test software solutions from Broadcom, Qualcomm, Marvell, MediaTek and others.

_Design Verification Test_

In 2013, Apple Inc. was a customer of our Semiconductor Test and Wireless Test segments.

Direct sales to United States government agencies accounted for 1%, 2% and 3% of our consolidated revenues in 2015, 2014 and 2013, respectively.

Approximately 7%, 20% and 32% of System Test’s revenues in 2015, 2014 and 2013, respectively, were to United States government agencies and 26%, 23% and 24% of System Test’s revenues in 2015, 2014 and 2013, respectively, were to government contractor customers.

We sell in these areas predominantly through a direct sales force.

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| | | $ | 615.7 | | | $ | 395.9 | |

We can