Product Warranties

3 Months Ended

Dec. 27, 2014

7.Product Warranties

The Company offers a one-year warranty on all Keurig® hot beverage system brewers it sells. The Company provides for the estimated cost of product warranties, primarily using historical information and repair or replacement costs, at the time product revenue is recognized. Brewer failures may arise in the later part of the warranty period, and actual warranty costs may exceed the reserve. 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 weeks ended December 27, 2014 and December 28, 2013 are as follows (in thousands):

	Thirteen weeks ended
	December 27, 2014			December 28, 2013
Balance, beginning of period	$	12,850		$	7,804
Provision related to current period	14,166			10,230
Change in estimate	—			(58		)
Usage	(7,336		)	(5,185		)
Balance, end of period	$	19,680		$	12,791

For the thirteen weeks ended December 27, 2014 and December 28, 2013, the Company recorded recoveries of $0.2 million and $0.5 million, respectively. The recoveries are under agreements with suppliers and are recorded as a reduction of warranty expense. The recoveries are not reflected in the provision charged to income in the table above.