Product Warranty

6 Months Ended

Jul. 03, 2011

Product Warranty

Product Warranty

H. Product Warranty

Teradyne generally provides a one-year warranty on its products commencing upon installation or shipment. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based on historical experience. Related costs are charged to the warranty accrual as incurred. The balance below is included in other accrued liabilities.

	For the Three Months Ended						For the Six Months Ended
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
	(in thousands)
Balance at beginning of period	$	9,502		$	8,339		$	9,886		$	6,435
Accruals for warranties issued during the period		3,976			5,202			7,553			8,857
Adjustments related to pre-existing warranties		(1,116	)		(234	)		(2,072	)		354
Settlements made during the period		(3,100	)		(2,671	)		(6,105	)		(5,010	)
Balance at end of period	$	9,262		$	10,636		$	9,262		$	10,636

When Teradyne receives revenue for extended warranties beyond one year, it is deferred and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred. The balance below is included in deferred revenue and customer advances and long-term other accrued liabilities.

	For the Three Months Ended						For the Six Months Ended
	July 3, 2011			July 4, 2010			July 3, 2011			July 4, 2010
	(in thousands)
Balance at beginning of period	$	9,870		$	4,470		$	8,972		$	4,055
Deferral of new extended warranty revenue		1,861			1,581			3,798			3,215
Recognition of extended warranty deferred revenue		(1,423	)		(408	)		(2,462	)		(1,627	)
Balance at end of period	$	10,308		$	5,643		$	10,308		$	5,643