7.	Warranty

Intevac provides for the estimated cost of warranty when revenue is recognized. Intevac’s warranty is per contract terms and for its disk manufacturing, solar photovoltaic (“PV”) manufacturing and display cover panel (“DCP”) manufacturing systems the warranty typically ranges between 12 and 24 months from customer acceptance. During this warranty period any defective non-consumable parts are replaced and installed at no charge to the customer. Intevac uses estimated repair or replacement costs along with its historical warranty experience to determine its warranty obligation. Intevac generally provides a twelve month warranty on its Photonics products. The provision for the estimated future costs of warranty is based upon historical cost and product performance experience. Intevac exercises judgment in determining the underlying estimates.

On the condensed consolidated balance sheets, the short-term portion of the warranty provision is included in other accrued liabilities, while the long-term portion is included in other long-term liabilities. The expense associated with product warranties issued or adjusted is included in cost of net revenues on the condensed consolidated statements of operations.

The following table displays the activity in the warranty provision account for the three and nine months ended September 30, 2017 and October 1, 2016:


	Three Months Ended						Nine Months Ended
	September 30, 2017			October 1, 2016			September 30, 2017			October 1, 2016
	(In thousands)
Opening balance	$	1,220		$	592		$	1,007		$	982
Expenditures incurred under warranties		(360	)		(80	)		(640	)		(384	)
Accruals for product warranties issued during the reporting period		169			320			675			494
Adjustments to previously existing warranty accruals		106			(110	)		93			(370	)

Closing balance	$	1,135		$	722		$	1,135		$	722

The following table displays the balance sheet classification of the warranty provision account at September 30, 2017 and at December 31, 2016:


	September 30, 2017		December 31, 2016
	(In thousands)
Other accrued liabilities	$	915	$	829
Other long-term liabilities		220		178

Total warranty provision	$	1,135	$	1,007