8. Product Warranties

The Company offers a one-year warranty on all Keurig® Single Cup Brewers it sells. KBU provides for the estimated cost of product warranties, primarily using historical information and repair or replacement costs, at the time product revenue is recognized. The Company is continuing to experience warranty claims at a lower rate than the average rates experienced over each of the prior two years, which had related primarily to a component failing at higher-than-anticipated rates in the later stage of the warranty life. Management believes that the lower rates are the result of improvements made in units produced since mid-2011 that incorporated an updated component that improved later-stage performance. The Company has incorporated the impact of this recent improvement in the rate of warranty claims into its estimates used in its reserve for product warranty costs. However, because brewer failures may arise in the later part of the warranty period, actual warranty costs may exceed the reserve. As a result, there can be no assurance that the Company will not need to increase the reserve or experience additional warranty expense related to this or other quality issues in future periods. At this time, management believes that the warranty rates used and related reserves are appropriate.

As the Company has grown, it has added significantly to its product testing, quality control infrastructure and overall quality processes. Nevertheless, as the Company continues to innovate, and its products become more complex, both in design and componentry, product performance may modulate, causing warranty rates to possibly fluctuate going forward. As a result, future warranty claims rates may be higher or lower than the Company is currently experiencing and for which the Company is currently providing in its warranty reserve.

The changes in the carrying amount of product warranties for the thirteen and twenty-six weeks ended March 30, 2013 and March 24, 2012 are as follows (in thousands):

	Thirteen weeks ended						Twenty-six weeks ended
	March 30, 2013			March 24, 2012			March 30, 2013			March 24, 2012
Balance, beginning of period	$	24,356		$	26,055		$	20,218		$	14,728
Provision charged to income	(3,805		)	11,773			7,186			35,820
Usage	(6,095		)	(12,088		)	(12,948		)	(24,808		)
Balance, end of period	$	14,456		$	25,740		$	14,456		$	25,740

For the thirteen and twenty-six weeks ended March 30, 2013, the Company recorded recoveries of $0.3 million and $0.6 million, respectively. For the thirteen and twenty-six weeks ended March 24, 2012 the Company recorded recoveries of $8.1 million. The recoveries are under an agreement with a supplier and are recorded as a reduction of warranty expense. The recoveries are not reflected in the provision charged to income in the table above.