Teradyne, Inc. Common StockTER

Capital structure and performance · Dividend policy and capital allocation

While we have declared a quarterly cash dividend on our common stock and authorized a share repurchase program, we are not required to do either and may reduce or eliminate our cash dividend or share repurchase program in the future. The reduction or elimination of our cash dividend or our share repurchase program could adversely affect the market price of our common stock.

Credit and liquidity · Liquidity and cash flow constraints

If our cash flow is inadequate to meet our obligations, we could face substantial liquidity problems. If we are unable to generate sufficient cash flow or otherwise obtain funds necessary to make required payments on the Notes or certain of our other obligations, we would be in default under the terms thereof.

International and currency · International operations and emerging markets

A significant portion of our total revenues is derived from customers outside the United States. Our international sales and operations are subject to significant risks and difficulties, including: unexpected changes in legal and regulatory requirements affecting international markets; changes in tariffs and exchange rates; social, political and economic instability, acts of terrorism and international conflicts.

Capital structure and performance · Financial performance volatility

Our operating results are affected by a wide variety of factors that could materially adversely affect revenues or profitability. As a result of the foregoing and other factors, we have experienced and may continue to experience material fluctuations in future operating results on a quarterly or annual basis.

Capital structure and performance · Debt management and refinancing

On December 12, 2016, we completed a private offering of $460.0 million aggregate principal amount of 1.25% convertible senior unsecured notes (the 'Notes') due December 15, 2023. The issuance of the Notes and any additional indebtedness, among other things, could make it difficult to make payments on this indebtedness and our other obligations.

Industry regulation · Safety and environmental regulations

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

Legal and litigation · Product liability and warranty claims

We may discover design or manufacturing defects in our products after they have been shipped and, as a result, we may incur development and remediation costs and be required to settle warranty and product liability claims. If any of our products contain defects or have reliability, quality or safety issues, we may need to conduct a product recall which could result in significant repair or replacement costs.

Legal and litigation · Litigation and legal proceedings

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

Legal and litigation · Intellectual property disputes

We have been sued for patent infringement in the past and receive notifications from time to time that we may be in violation of patents held by others. An assertion of patent infringement against us, if successful, could have a material adverse effect on our ability to sell our products or it could force us to seek a license to the intellectual property rights of others.

Market position and competition · Competitive pressure and market share loss

We face significant competition throughout the world in each of our reportable segments. Some of our competitors have substantial financial and other resources to pursue engineering, manufacturing, marketing and distribution of their products. We also face competition from emerging Asian companies and internal development at several of our customers.

Strategic execution · Merger acquisition and divestiture risks

In June 2015, we acquired Universal Robots, in 2018, we acquired Energid and MiR and, in 2019, we acquired Lemsys and AutoGuide. We may not be able to realize the benefit of acquiring or successfully growing these businesses. The integration process for our acquisitions may be complex, costly and time consuming and include unanticipated issues, expenses and liabilities.

Innovation and product development · Intellectual property protection and infringement

We protect the technology that is incorporated in our products in several ways, including through patent, copyright, trademark and trade secret protection and by contractual agreement. However, even with these protections, our IP may still be challenged, invalidated or subject to other infringement actions.

Customer and revenue · Customer concentration and key customer dependence

The market for our products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. In each of the years 2019, 2018 and 2017, our five largest direct customers in aggregate accounted for 27%, 27% and 32% of consolidated revenues, respectively.

Corporate governance · Shareholder rights and activism

Publicly traded companies are subject to campaigns by shareholders advocating corporate actions such as financial restructuring, increased borrowing, special dividends, stock repurchases or divestitures. We may become subject in the future to such shareholder activity and demands. Such activities could interfere with our ability to execute our business plans, be costly and time-consuming, disrupt our operations.

Geopolitical and trade · Trade policies tariffs and sanctions

In 2018, the United States Trade Representative imposed a 25% tariff on many products, including certain Teradyne products that are made in China and imported into the United States. Also in 2018, the United States Department of Commerce announced that it has commenced a review of new export controls focusing on emerging and foundational technologies.

Natural and catastrophic events · Pandemic and public health crises

Commencing in early February 2020, the coronavirus outbreak has resulted in disruption to our business operations in China, including increased travel restrictions and the extended closing of certain of our offices. At this time, the disruption has not had a material adverse impact on our business. If the spread of the virus continues and disruption in China or elsewhere worsens, our business may be materially impacted.

Digital transformation and innovation · Technology obsolescence and evolution

If we fail to develop new technologies to adapt to our customers' needs and if our customers fail to accept our new products, our revenues will be adversely affected. In a rapidly evolving market, such as ours, the development or acquisition of new technologies, commercialization of those technologies into products and market acceptance and customer demand for those products are critical to our success.

Cybersecurity and data protection · Data breaches and cyber attacks

We rely on various information technology networks and systems to process, transmit and store electronic information, including proprietary and confidential data. We have experienced several attempted cyber-attacks of our network. Despite these preventative security measures we have implemented, we may continue to be vulnerable to attempts by third parties to gain unauthorized access to our networks or sabotage our systems.

Human capital and workforce · Talent acquisition and retention

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

Core operations · Operational disruption and business continuity

Our operations, and the operations of our customers and suppliers, are subject to disruption for a variety of reasons, including work stoppages, acts of war, terrorism, health epidemics, fires, earthquakes, hurricanes, volcanic eruptions, energy shortages, telecommunication failures, tsunamis, flooding or other natural disasters.