Guarantees

U.S. GAAP requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligation it assumes under that guarantee. In addition, U.S. GAAP requires disclosures about the guarantees that an entity has issued, including a tabular reconciliation of the changes of the entity’s product warranty liabilities.

Accrual for Product Warranty Liabilities

We record a reduction to revenue for estimated product returns at the time revenue is recognized primarily based on historical return rates. Cost of revenue includes the estimated cost of product warranties. Under limited circumstances, we may offer an extended limited warranty to customers for certain products. Additionally, we accrue for known warranty and indemnification issues if a loss is probable and can be reasonably estimated. The estimated product warranty liabilities for the three and six months ended July 27, 2014 and July 28, 2013 were as follows:



	Three Months Ended						Six Months Ended
	July 27,			July 28,			July 27,			July 28,
	2014			2013			2014			2013
	(In thousands)
Balance at beginning of period	$	8,250		$	14,833		$	7,571		$	14,874
Additions	1,155			3,482			3,189			4,900
Deductions	(1,203		)	(841		)	(2,558		)	(2,300		)
Balance at end of period	$	8,202		$	17,474		$	8,202		$	17,474

In connection with certain agreements that we have executed in the past, we have at times provided indemnities to cover the indemnified party for matters such as tax, product and employee liabilities. We have also on occasion included intellectual property indemnification provisions in our technology related agreements with third parties. Maximum potential future payments cannot be estimated because many of these agreements do not have a maximum stated liability. As such, we have not recorded any liability in our Condensed Consolidated Financial Statements for such indemnifications.