Product Warranties

3 Months Ended

Dec. 26, 2015

10.Product Warranties

The Company offers a one-year warranty on all Keurig® hot and Keurig® KOLD™ beverage systems. 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 26, 2015 and December 27, 2014 are as follows (in thousands):

	Thirteen weeks ended
	December 26, 2015			December 27, 2014
Balance, beginning of period	$	15,162		$	12,850
Provision related to current period	17,969			14,166
Usage	(8,423		)	(7,336		)

Balance, end of period	$	24,708		$	19,680

For the thirteen weeks ended December 26, 2015 and December 27, 2014, the Company recorded recoveries of $0.3 million and $0.2 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.